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Why aren't you investing? By Sarah Coles
Whether you need to up-grade your car or you're waiting for next year's pay rise, the vast majority of people have an excuse not to save or invest. Indeed, according to Clydesdale Bank, only one in eight of us are saving enough for a The reality is that those who keep coming up with reasons not to save could be facing a cash-strapped future. But it doesn't have to be this way - while most people have what they think is a good reason not to save, most excuses can easily be overcome. So, take our quiz and find out how you can beat your savings demons and start laying the foundations of a more secure future. QUIZ 1. If you had a windfall would you invest any of it? a) Yes b) No. I'm not worried about the future c) No. I'd pay my debts off d) No. I'm afraid of a stockmarket crash e) No. I wouldn't know where to start 2. What will your retirement be like? a) Comfortable. I have plenty saved up b) I'll have my home and the state pension, I'll be fine c) No worse than now, I'm struggling d) No worse than Equitable Life pensioners e) I haven't a clue 3. What is your worst fear about money? a) I don't worry at all - I save regularly b) I try not to think about it c) I'll never have enough for the lifestyle I want d) I'll be ripped off e) I'll make the wrong decision and lose it 4. What is an ISA? a) Something I invest in every year b) Something I don't need to worry about c) Something for people with too much cash in the bank d) An over-hyped vote-winner e) I don't know 5. What direct debits come out of your account each month? a) Bills and regular savings b) I cannot remember c) Debt repayments, bills, and instalments for things I bought on credit d) Direct debits are a con e) What's a direct debit? 6. Why aren't you saving? a) I am b) I don't want to think about it c) I don't have enough spare cash right now d) I don't trust the industry enough to give them my money e) I don't know what I'm doing Mostly A: You're sorted You're on top of your savings and your investments. You're saving regularly, and know that whatever life throws at you, your prudence will stand you in good stead. Of course, life does change, and it's worth revisiting your investment decisions annually to ensure that your savings and investments still match your needs. Other than that, you have very little need for a quiz like this. You're one of the two in 10 doing the right thing. Mostly B: You're in denial You're not saving for the future, and you're not even thinking about it. You're pushing the issue to the back of your mind and concentrating on today. It's one of the most common reasons for having no investments and, unfortunately, it's one of the worst. It's understandable. Nobody wants to consider getting ill, and most young people cannot imagine getting older, so we choose not to think about a time when we might need to fall back on our savings. But you cannot afford to continue living in denial about your financial future. You need to take a deep breath and have a good look at where you stand right now. It's worth assessing everything you have saved for the future, including pensions, unit trusts, endowments and so on. Then work out what you will need to live on if you were to get sick, and how much you will need to put aside to have a comfortable retirement, and you will see your shortfall. This is not an easy task, so consider speaking to an IFA who can do the hard work for you. Mostly C: You're strapped for cash You're not saving because you just don't have the spare cash. You are not alone - according to a survey by Legal & General, 43% of people have nothing left in their bank account after paying the monthly bills and debt repayments. The only way to tell whether you truly cannot afford to save is to do a proper household budget, and see where your money is going every month. This may not be immediately obvious, because it's easy to fall into the mindset that you need to update your wardrobe regularly, or that you can't survive without three holidays a year, but these things are a matter of choice, and cannot come before the bare necessities. So, it's time to be a bit stricter and set aside a sum every month for investing, instead. Mostly D: You're cynical It's a lack of faith in investments and the financial services industry in general that's holding you back. On the face of it, this seems the best reason of all not to invest. However, the solution is not to avoid investing, but to ensure that you invest in the right things, and take control of your future. One approach is to consult a good financial adviser. The trouble is that for many people the bad advisers they used in the past have put them off advisers for good. But this doesn't have to be an insurmountable obstacle. Alternatively, you can go it alone - providing you do your research. Online resources and magazines will help you work out what types of investment suit you best, get an idea of the funds available and research the top performers. Some people just don't trust the stockmarket, especially if they have lost out in the past. It's worth bearing in mind that this wasn't because shares are essentially flawed, rather the specific investment was defective, possibly because they took more risk than they intended, didn't understand the nature of the investment or because they invested for the short-term. Mostly E: You're confused You're held back by a lack of understanding of what is a very intricate subject. It's nothing to be embarrassed about; the complexity of investment products, the markets themselves, the compliance issues and the tax all conspire to make the subject off-putting. It's possible to learn about financial products and services in complex detail, but there's no real need to go too deep. Don't worry about what you don't know, and concentrate on what you do. There's nothing hugely complex about paying off expensive debts, getting a cash savings account, then investing in shares by buying a unit trust, and getting a pension. If this still seems too daunting, you can visit a reputable adviser, and they will guide you through the process in full. They will also keep things clear and simple, and if they start to talk in financial jargon you can just give them a nudge and they'll translate it into English. Breaking it down into steps should stop you thinking you need to know everything before you get started. And once you've taken the first step, taking the next one will be easier.
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