This article was published on Tue 31 Oct 2017. At the time of publishing, this article was true and accurate, however, over time this may have changed. Some links may no longer work. If you have any concerns about this please contact us

Nearly all investments have some form of risk – whilst you can’t completely remove this, you can manage it. Understanding risk and the levels you are willing to accept is a key concept of successful investing. Below is an overview of the things you need to know to get you started.

Investment risk – the basics

Put simply, investment risk is the possibility of losing some or even all of the money you have invested. Most investments carry an element of risk, the general rule is that the more risk that you take, the greater the potential return – but also the greater the potential losses. When you are thinking about investing, you should fully research where your money is going and the associated risks before making your final decision.

Types of risk

When investing, there are different types of risk that you need to consider, these include:

• Market risk: This is where stock markets fall causing losses which can negatively impact your investment. In order to give your investment the maximum chance to recover from market losses you should consider investing over at least a 5-year period.

• Capital risk: High investment gains are possible but these are usually linked with higher volatility, which in turn means you may not get back the capital you invest. Make sure you do not choose your investment purely on the level of possible returns and forget to balance this against the risk you are taking. Remember that the past performance of any investment is no guarantee of how it will perform in the future.

• Performance risk: The performance of funds will vary depending on the assets within them. Even if funds have similar objectives, there is no guarantee that they will produce the same results.

How to measure your attitude to risk

Everyone has their own attitude to risk and the limits they are willing to accept. There are a number of factors that can affect your ability to accept risk such as your income levels, age, health and your overall investment goals. To help assess your attitude to risk you should ask yourself some key questions:

1) Could you manage if your investments fell in value?
2) How would you feel if you did not meet your investment goals?
3) Are you happy to accept that your investment will fluctuate with the value going up and down over a period of time?

Remember it’s your money and you need to feel comfortable with any investment decision you take. You should re-assess your attitude to risk over time as your personal circumstances alter; what may not be acceptable when you have young children to support, you may be happier with once they have left home and are no longer dependent on you.

Easy steps to balance your investment risk

Diversification: One way of balancing the potential returns from your investment against the level of risk is to select an investment where your money is spread across different types of markets, sectors and assets. This is called diversification and means you are avoiding putting all of your investment eggs in one basket.

Invest regularly: You could consider an investment that allows regular savings. Most investments fall or rise over time so investing a regular amount over this period can reduce the overall risk by spreading the purchase of assets out over the ups and downs of the market.

Get professional help: If you are unsure how best to balance your risk levels against your investment goals think about contacting a financial adviser for help and support.

Police Mutual offer a range of savings and investments products. Whether you want to save regularly or invest a larger amount, our products could help meet your needs.

This article was published on Fri 01 Sep 2017. At the time of publishing, this article was true and accurate, however, over time this may have changed. Some links may no longer work. If you have any concerns about this please contact us

It’s important to get into the habit of saving but very few of us have the motivation to save regularly just because we know it’s the right thing to do.

Whether you’re looking to buy a new car or build a nest egg for your retirement, you’re more likely to succeed if you have an end goal in mind.

Take a look at the simple steps below to help you start your savings journey:

Step one: What’s your goal? 

Ask yourself ‘what do I want to save for?’ Your goals might be short term, like taking a dream holiday; long term, like saving a deposit for a new home; or somewhere in between, such as paying off a loan. Remember it’s next to impossible to save successfully for something if you’re not clear on the end goal.

Step two: Create a timeline

The next step is to decide how much time you have to reach your goal. If there’s no set date, make sure that you pick one. It’s much easier to reach your savings goals if you break them down into smaller milestones.

Step three: Assess your finances

Once you have a goal and a timeframe in which to achieve it, you need to decide how much you can save in order to successfully reach your target. It’s easier to work this out as a monthly figure and a budget calculator can help with this. Remember, honesty is the best policy – be realistic with yourself about the amount you can afford to save. Also set aside some money for emergencies, otherwise your savings plan can suffer a major setback if something unexpected comes up.

Step four: Every bit counts

Have a look at your regular monthly spending – re-evaluating some of your expenses such as gym membership, paid TV services and mobile phone plans could free up some extra money for your savings pot. Ask yourself if you’re paying for a monthly subscription that you no longer use? Or could you negotiate a better deal with your provider as a long-term customer? To give your savings the best chance to grow you need to spend some time finding the right home for them

Step five: Do your homework

To give your savings the best chance to grow you need to spend some time finding the right home for them. This will depend on how long you have to reach your goal and how much risk you want to take. Over the short term you could consider a savings account or cash ISA which will allow you easy access to your money. For the medium and longer term think about a fixed-term savings product or an investment product which could provide protection from inflation over the longer term.

Step six: Track your progress

Tracking your progress is a great way to stay on top of your savings goals. Set aside some time each month to review your income and expenses and see how much you have saved so far. If your savings aren’t quite where you want them to be, don’t be discouraged, have another look at your budget and adjust your targets accordingly.

Police Mutual offer a range of savings and investments products. Whether you want to save regularly or invest a larger amount, our products could help meet your needs. To find out more about our range click here or call the team on 0345 88 22 999.

Police Mutual Assurance Society Limited is an incorporated friendly society. Registered office: Alexandra House, Queen Street, Lichfield, Staffordshire WS13 6QS.

This article was published on Wed 01 Mar 2017. At the time of publishing, this article was true and accurate, however, over time this may have changed. Some links may no longer work. If you have any concerns about this please contact us

The UK’s inflation rate is now at 2.9%, which is its highest since 2013.

Combined with the fact that savings rates remain at low levels, it’s now even harder to secure a good return. So what does inflation really mean for your savings and how can you minimise its impact?

What is inflation?

Inflation is when money loses value over time. It is happening constantly and is generally why things are more expensive now than they were 10 or 15 years ago. When the inflation rate is high, it means you can buy less for the same amount of money.

How does inflation impact your savings?

High inflation is not good news for savers, as it generally means that interest rates on savings accounts are low. If inflation is higher than your savings rate your money is actually shrinking as prices are increasing faster than your savings are growing. If your goal is to make money then you need to find a savings account or investment that beats inflation.

What can you do to inflation-proof your savings?

There is no way to completely protect your savings from the effect of inflation but there are steps you can take to minimise the impact. Generally cash savings accounts are the worst place to leave your savings long term. However, if you are saving for the short term or if you need to get access to your money quickly then cash accounts are usually safer.

If you have a longer-term savings goal in mind (5 years or more) it might be time to consider investing at least part of your savings.

Don’t forget the impact of tax

You also need to consider how much of the interest you will receive on your savings before you are taxed. From April 2016, a basic-rate tax payer can earn up to £1,000 in interest tax free each year. If you earn over this you will need to pay tax which will reduce the value of your savings even further. Don’t forget that you have an annual ISA allowance each year (£20,000 for 2017/2018) – this is the amount you can save in an ISA tax free. ISAs can be either cash or stocks & shares linked and using this allowance to the full could help towards your fight against inflation.

Can investing help protect against inflation?

If you have longer-term savings goals and you are willing to accept some level of risk you could consider investing some or all of your savings. History shows that investments can deliver better returns than cash accounts if they are left to grow over the longer term. Please note, past performance should not be seen as a guide to future performance.

There are many different types of investments available including stocks and shares. Contrary to what many believe, you don’t need a large lump sum to start investing and it’s not as complicated as you may think. However, investments carry additional risks and can fall as well as rise, so you could get back less that you invest. The general rule is the greater the potential return the greater the potential loss.

Finally, don’t forget to review regularly

Keeping your savings in a top-paying account is a step towards beating inflation. If you have older savings accounts (especially those that had introductory offers) your money may not be working as hard as it could for you. Conduct a review of your savings accounts and take action on any that are paying a low rate.

Police Mutual offer a range of savings and investments products. Whether you want to save regularly or invest a larger amount, our products could help meet your needs. To find out more about our range click here or call the team on 0345 88 22 999.

Police Mutual Assurance Society Limited is an incorporated friendly society. Registered office: Alexandra House, Queen Street, Lichfield, Staffordshire WS13 6QS.