Investing could offer better returns than cash savings, but this means more risk. Please remember the value of your investments can fall as well as rise. You may get back less than you originally invested.
When deciding how to invest, you should try to understand the level of risk involved and how much you're comfortable with. It's important to think about how long you want to hold your investment. It's a good idea to invest for at least the medium to long-term: at least 5 to 10 years.
A number of factors affect how able you are to accept the risk of losses. These include how long you plan to invest, your income level, your age and health, your investment goals, the source of your money, and how much of your total assets are invested.
For example, if your investment is funded by an unexpected windfall, you may be willing to accept a higher level of risk than if you were using your life savings.
To get the most out of your savings ideally you want to beat inflation with higher returns than you might get from a normal savings account. Inflation is a general rise in prices across a wide range of goods and services. You may want to do this at a level of risk you're comfortable with.
Generally, the more risk you take, the greater the potential rewards, although this is not guaranteed. But everyone feels differently about risk, so here’s an overview of the main points to consider:
An asset class is a category of investments, or economic resources, that shares typical features and behaves in a similar way. Each asset type has its own level of risk and return and will perform differently in any given market environment.