Finance Friday: Investing for the future
Last week, I wrote about supply and demand within markets. Supply and demand effects all free markets. The housing market in the UK, particularly in the south is seeing rising prices, because demand is high and supply is low.
Building more homes seems to be a good idea, but not everyone agrees. Some people think that we shouldn’t be allowed spare rooms! It is a pity that so many marriages break up and people end up living alone. We can perhaps foster a more tolerant society to alleviate that problem. We can encourage men to give up smoking and drink less alcohol and then perhaps we would have fewer elderly widows living alone. I think there could be better ways to increase supply of housing. We can build more housing in our towns and cities. We really need a new design, the high rise flats of the 1960’s were a disaster because of bad design. Not all high rise apartments are bad, some are very well designed and so they are popular. They have spacious rooms, well maintained communal areas and good thermal insulation. Such homes might be good for young single people and young couples. It would reduce the demand for family homes. A lot of building has been done on the edge of parks and nature reserves making them smaller and making access more difficult. While it is a good idea to build housing that overlooks the park or nature reserve, it shouldn’t encroach upon it. Specialist housing for elderly people overlooking the park would be welcome. We need to invest in quality housing and especially in social housing for rent.
On a personal level we need to invest too. The future of our country and our community is important, but so is our individual futures. We can save for the future. Most people save for new household items, perhaps for a new car or even a new home. Interest rates are extremely low now and we are lucky to get 3% on savings. I save with Zopa and get 4% plus, but that can’t be included in an ISA. I also invest in stocks and shares which can be included in an ISA, with the limit increasing to £15,000 in July. Now is a good time to invest for your future.
You can invest in funds and get a better return than the bank. I prefer to have the thrill of self selection and just lately I have had a terrible time. My returns dropped to single figures! I expect to get at least 10% return on my investments and could do much better. The top companies, the ones in the FTSE 100 tend to offer the lowest returns, but even these have done quite well as the economy seems to recover. I bought Lloyds Bank shares for less that 30p and today they are 80p. That was a risk, but it turned out well; perhaps because I did some research and put some thought into it. I also own shares on the AIM (Alternative Investment Market). One of those invests in oil exploration, if they find oil or gas, the value of that investment will soar. At the moment, the shares are valued at half what I paid. I am taking a risk, but without people willing to take a risk, we would have no new sources of oil or gas. The potential return depends risk, the higher the risks; the higher the returns.
Do I have any stock market tips? No. I will however write about my next investment. That will probably be the Saga IPO (initial Public offering). I have registered for that. I’m hoping as a share holder they will give me a discount on their products, my car insurance premium is ridiculous.
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