According to the Telegraph, if you have more than £10,000 in savings you could be encouraged to invest it under an initiative by the Financial Conduct Authority (FCA). The initiative could result in nearly 2 million people investing £17 billion.

The FCA hopes that investing your cash could help inflation-proof it, at a time when interest rates remain at historic lows and inflation has been rising. If you want to learn how investing could help inflation-proof your money, read our recent blog.

In August 2021, inflation rose to 3.2% from 2% in July, the highest one-month increase since records began. This compares to a Guardian report in the same month, which reveals that the most competitive fixed-interest rates accounts offered well below 2% interest, with many paying just 0.01%.

So, at a time when you could be encouraged to invest your money, read on to discover why it’s important to work with a financial planner first, and how they could help you avoid a costly mistake.

1. A financial planner will help you understand risk

Part of the FCA’s £11 million campaign will be to warn potential investors about high-risk funds, which could result in heavy losses. The Telegraph explains this has been prompted by more people putting their money into high-risk investments in a bid to expose it to greater potential growth.

One of its aims is to halve the amount of people with holdings in “volatile assets”, such as bitcoin, from 3.2 million to 1.6 million.

Speaking with a financial planner will help you understand the level of risk your money is exposed to generate growth potential, and whether it’s right for you. This could help ensure that a downturn in the market does not impact on your wealth as significantly as putting your money into higher risk, more volatile assets.

2. A planner will help you understand the cost of your investment

If you are in an investment with high charges, the potential growth could be significantly reduced by the fees deducted from it.

A financial planner will help you understand the cost of any investment you might be considering. More than this, they will help ensure that the level of fees is right for you.

For example, while you may want to keep charges to a minimum, you may also like the peace of mind that could be provided by a more expensive investment that’s overseen by a fund manager.

A planner will help you understand which option may be better for you and why.

3. They could help ensure your investments are on track

Once you’ve invested your money, you can then work with your financial planner to track its performance.

If you have regular meetings with a planner, they can help you understand what’s happening in the markets and provide options you may want to consider. This could help you make better decisions around your money and avoid a mistake you later regret.

For example, a planner could help you understand your options if the market takes a downturn, which could help you side-step an action you may have taken that would have cost you dearly.

4. They provide financial coaching to help you make the right decision

A financial planner will take your wider financial situation into consideration when looking at investments for you, and could provide coaching. Not only could this ensure that your investment dovetails into your wider wealth properly, but it could also ensure your wealth is as tax-efficient as possible.

The planner could also help provide tips on budgeting and how to create a financial safety net to protect you from the unexpected.

5. A planner could boost your sense of wellbeing

Working with a financial planner can help reduce levels of stress and build your confidence around investments. This could help you feel more in control of your wealth.

The charts below show research by pension provider Royal London, which reveals that people who use a financial planner tend to feel more in control of their finances and less anxious about money.

Source: Royal London

The research also shows that working with a financial planner can help you feel more confident about your future. One reason for this could be because you and your planner have created a long-term strategy that provides you with the knowledge that your investments are on track to meet your aims.

Get in touch

If you would like to discuss investing your money and the potential benefits it could provide, please email hello@ardentuk.com or call us on 01904 655 330.

Please note

This article is for information only. Please do not act based on anything you might read in this article. Contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down and up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and your financial circumstances.