Putting money into a pension
is a sure-fire way to prepare your finances for later life, but what investments can you make now to not only help fund your retirement, but also boost your current savings? John Fitzsimons (@JohnTheJourno
) looks beyond the usual ISAs and bank accounts, and talks to money moguls who had success with other investments.
Cryptocurrency – fad or finance?
Cryptocurrencies are seen by some as the future of finance, and plenty of investors have opted to take a punt.
Some who got in early can say that their investments have paid dividends. Take Erik Finman, a 19-year-old from Germany who invested a gift from his grandmother in Bitcoin back in 2011. He now owns 401 Bitcoins, which at the time of writing is worth more than £3 million.
Finman certainly doesn’t see Bitcoin and the like as a bubble, either. Posting on Twitter, he said
: ‘Cryptocurrency represents the largest transfer of wealth our generation has ever seen. Never before have young people been able to change economic classes so quickly. This is bigger than Bitcoin.’
However, it’s important to remember just how volatile these digital currencies are. In the space of just a month at the start of 2018, the value of a single Bitcoin has fluctuated between a low of $8,000 and a high of almost $11,000, while other cryptocurrencies have seen similarly dramatic price changes.
As a result, there are plenty of sceptics asking whether cryptocurrencies really hold any actual value.
‘Bitcoin’s value does not seem justified by its role as money, payment system or commodity and we struggle to assign a fair value to it,’ observes Lilian Chovin, Investment Strategist at Coutts (@CouttsandCo
). ‘While some form of cryptocurrency might, in the future, co-exist with traditional currencies, it is our view that Bitcoin, in its current form is unlikely to be one of them.’
Bank of England governor Mark Carney had stronger words for Bitcoin in a recent Sky News interview
, saying that cryptocurrencies have ‘all the hallmarks of a bubble. And normally they end with a pretty brutal reckoning.’
The governor has also called for tighter regulations on cryptocurrency – as clear a sign as any that anyone considering them as an investment should seek professional advice first.
Investing in property
Investing in property isn’t that out of the ordinary, but there are plenty of different approaches people have taken that have seen them make a million from bricks and mortar.
One good example is Laurence Lameche, who moved to London in 1997 with no money, job or even somewhere to live beyond his Ford Fiesta. He built a property portfolio by finding motivated sellers – often those struggling to pay the mortgage or having issues with problem tenants – and ‘babysitting’ their mortgage by taking over the repayments until house prices increased to a level where the property could be sold for a profit.
‘It is such a great way to get on the property ladder by acquiring properties without the need of a mortgage or deposit,’ says Laurence. ‘To get these deals you need to speak to as many people as possible. That means going to networking events, property meetings, speaking to landlords, letting agents, leafleting a local area, putting up postcards, and even taking out newspaper adverts.’
Starting a business
Investing in yourself and your business idea can seriously pay off.
Take Akshay Ruparelia, a teenager from Harrow, who wanted to bring the ‘Uber’ approach to the world of estate agency. He set up Doorsteps.co.uk
while studying for his A-Levels, an online estate agent that charges just £99 for a sale, significantly less than most high street agents.
The site has been active for little more than a year, selling £120 million worth of property already, and in a recent funding round was valued at £12 million.
Not bad for a venture started with a loan of £7,000 from his relatives.
Stocks and shares
When retired teacher Margaret Dickson passed away in 2013 her family believed that her only asset was the small flat she called home in Glasgow. However, it turned out that Margaret had been a wily investor in the stock market, building up a portfolio worth more than £1m.
The advantage of investing in stocks and shares is that, while it won’t lead to you becoming an overnight millionaire, over the long term it can deliver returns. However, you need to be aware of the risks, so impartial financial advice is always recommended
Picking the next winner
Figuring out what the next big investment trend will be is easier said than done, it could be a new form of currency, or even an alternative asset like wine or art. Whatever it is, make sure you understand the risks involved and get impartial financial advice before handing over your cash.