Investing your savings

Regardless of how old you are, your savings should be in a safe place where they can not only be held securely until a future date, but where they can increase in value or worth. If you have come across a lump sum or have simply saved well over time, this is a short guide to investing, including where to invest, what to invest in, and how to go about investing.

Different savings accounts

For a hassle free way of saving, if not exactly investing, many banks offer accounts with higher rates of interest than regular savings accounts. These include cash-investment accounts, or term-deposit accounts, where many banks will take your savings (often with a minimum of around $5000) for a set amount of time, perhaps five years, at a set rate of interest - perhaps six percent. After the term is over you take your money back. A sum of $10,000 could therefore get you a comfortable $600 back over the period in question.

Ways of investing

If you really want to be in with a chance of bigger returns, you need to make the step from a saver to an investor. This is of course fraught with more risk, so sound financial advice is a must.

Buying shares

Buying shares is one of the best ways of increasing the net value of your savings, but it'll take a little self-education before you are ready. The best thing to do if you're a true beginner is take an Australian Securities Exchange (ASX) online course after signing up to the MyASX programme. These days, almost half of all Australians have - whether indirectly or directly - shares in some company or another.

Managed Funds

Managed funds are a good way of experiencing some of the financial rewards of playing the stock market over time, while leaving the work to someone else. They are taken care of by fund managers, who pool your savings with other investors into a single fund, with the result that you are capable of investing in areas previously out of reach. Many funds let you invest small amounts from $500, which would otherwise mean you investing your entire sum in one company, which would be a risky strategy. With a managed fund, this can be spread across lots of different companies and areas. Naturally, they are subject to fees, but for more information visit the Investment and Financial Services Association.

Investing in your superannuation

Although it's generally your employer that injects cash into your super fund, you too can do so. There are several reasons why you might do this:

• You can have money taken straight from your wages if you opt for a 'salary sacrifice'; meaning you're not tempted into spending it before you manage to deposit
• Interest on super is 'compounded', so interest earned by the super fund is added to your total investment, which means you earn more. Experts suggest a sum compounded at 7 percent p.a. will double its value in a decade
• Depending on your status, you may be eligible for low-income super rebate and the spouse rebate
• You will generally pay less tax on this type of saving than you would on bank interest.

Investing in Property

Of course, you will need to have a large amount of cash to do this, but it can be a great investment if market conditions are right. An alternative to investing directly in property is Listed Property Trusts (LPTs). These enhanced liquidity trusts offer increased exposure for the investor to the value of the real estate in question (that owned by the trust), as well as the income the properties generate - often around 5-9 percent p.a. They can generate high returns and be traded on the ASX. For more information, read Investor Buddy's article on Listed Property Trusts or visit the ASX website.