How to increase your savings by investing wisely in 2022

Many people will have started 2022 by buying a gym membership or hiring a personal trainer – but making resolutions for your financial health is just as important.

Investing is one of the best ways to grow your money. Over time, the stock market has been the only place where capital has consistently grown before inflation.

Yet many of us still don’t know the best way to grow our cash. In our 20s and 30s, we don’t invest due to lack of funds or lack of knowledge.

In retirement, we become more cautious and avoid the most profitable investments. Many end up missing the best yields throughout their lives.

With the right plans, investing can be easy and can be done with only a small amount of savings. Telegraph Money gives 10 top tips for investors of all ages.

1) Use an Isa or pension

People under 40 should consider the Lifetime Isa as a starting point, as it includes a 25% government bonus. First-time buyers can use it for a security deposit and retirement savings, although you will be charged an effective penalty of 6.25pc if you withdraw the money for any other reason except a terminal illness.

However, for higher rate taxpayers (earning over £50,270 a year), investing via a self-invested personal pension – also known as a Sipp – is often the best option thanks to the tax relief.

For those saving for young children or grandchildren, a Junior Isa is a logical option. Deciding which investment tools are right for your situation is crucial for long-term planning, as it will reduce the taxes you will pay in the future.

2) If you are young, take more risks

Those just starting out should invest in the stock market and have broad exposure to companies around the world.

You can do this by investing in a tracker fund – which tracks an index like the FTSE 100 or MSCI World – or you can spend time researching active funds and buying one from a manager you think can beat the index.

Investing in high-risk parts of the world, including emerging markets and private equity, could offer higher returns.

3) Explore all the options and understand the language

Whether you decide to invest in a tracker fund that follows the market or want to back an active manager that you hope will beat the market, investors should consider all of their options before making a decision. decision.

People can invest in specific themes, like renewable energy or clean water, or ethical funds, which direct your money to “good” companies.