The big topic and discussion right now is where to invest cash – it has been reported in the news that the Governor of the Bank of England is encouraging people to spend their cash!
So what are the options open to investing your cash?
– Put it in a deposit account and earn a very low amount of interest?
– Invest in property?
– Invest in a business?
– Invest cash in stocks and shares is a possibility?
– ISA’s, Pensions and other investments or what about government bonds?
The above are a few ideas of what can be done and in many cases for most people this is a bit of a dilemma! A colleague of mine is trying to raise a significant amount of capital for business investment purposes, and it seems as though the majority of the people he has approached are wary of the ‘Double Dip’ potential, so are holding on to their cash right now.
One of the problems with cash is that, certainly with interest rates so low, the amount you will earn with it sitting in a deposit account will not keep up with the rate of inflation, so that in the long-term the buying power of your cash will lessen over time.
However, this is not to say that you should rush out and spend it all, however, having said that I can quite understand where the Bank of England Governor is coming from, if people don’t spend because of their worry about a ‘double dip’, they will inadvertently bring about the ‘double dip’ anyway, as the result of holding back – a kind of self fulfilling prophesy as it were!
So if cash is not a good option, then what about the other options open to investors right now. Well the good news is that it is extremely cheap to borrow right now (if you are able to obtain the loan in the first place and if you shop around), so if you decide to borrow to buy property or to buy a business, then this is can be extremely exciting and highly rewarding.
Right now, that is exactly what I am doing – I am combing some of my cash with a loan from the bank (at the rate of just 4.59%!) to buy a business. The return on my cash investment is looking like 105% in the first year, which to my way of thinking is an excellent return on capital, and way in excess of what it will earn in a deposit account or in property and is well in excess of the UK’s rate of inflation right now!
I would always recommend that you do your homework, but don’t be blinkered – there are too many people that say I can’t do this or that, or I don’t have the money etc. Instead of telling yourself ‘I can’t do this or that’, ask yourself questions using the word ‘HOW‘; like how can I do this or; how can I do that; Your brain likes questions like this. If you ask the right questions your brain can set about to answer them, whereas if you tell yourself it can’t be done, well guess what – ‘It Can’t!‘ and you will be right.
This article is not meant to be about investment advice, as I am not regulated by the FSA, but it is about making you think about other ways of using spare cash to invest in other areas that you might not have done before.
It might be worth your reading my article about the ‘Power of the Subconscious Mind’ if you want help with your thinking on this subject.