Five Tips for Growing Your Capital

The purpose of a growth investment is to grow your capital over a period of time, allowing you to take away a larger pot of money than you started with. However, it’s not always as simple as that and there will be an element of risk to your funds, but investing for growth can prove to be a very satisfying way to make your money work harder.

A quick word on risk:

Generally speaking the higher the level of risk involved in your chosen investment the higher the rate of interest you are likely to see. Some investments will be more risky than others and you should think carefully about the level of risk you can afford to take before you start investing.

Five Steps:

1) Choose wisely. There are a number of different ways you can invest to generate capital growth from putting your money into an ISA to investing in stocks. Do some research and find the option that best suits you and your attitude to risk.

2) Keep track. Don’t let your money simply sit in a low interest account and gather dust. It can be all to easy to lose track of capital, so keep an eye on yours to ensure its working at optimum level. Remember that if the account your cash is sitting in doesn’t even keep up with inflation it can mean that you lose out in real terms, and your capital is in fact shrinking.

3) Commit. Investment for capital growth tends to be a mid-long term investment option so be prepared and wait it out. Investing for capital growth will often also mean that you need to sacrifice accessibility, so make sure you factor this in when planning your investment. Don’t panic if you don’t see much growth straight away, the longer you are able to leave your money invested the greater the chance that you will some capital gains.

4) Diversify. Diversification across a range of asset classes can help reduce risk of capital loss, so although your capital may not grow as fast it is likely that you will see a more steady rate of growth over time.

5) Get started! The sooner you get started the sooner you can get your capital working for you.

The world of investment can be complex, with a wide variety of opportunities available from share dealing to bond investment. Take your time finding the right option for your needs, if you still unsure you might want to seek professional advice from an expert in the field.

John T Hughes writes for Share Dealing Account, a leading online source of information on share dealing accounts in the UK.