Local Authority Bonds

Many local authorities raise money by inviting the public to lend to them and offering good rates of interest.

However, the money is normally tied up for the whole period of the loan, usually between one and ten years, though some shorter term investments are possible.

See http://www.communities.gov.uk/localgovernment/localregional/localgovernmentfinance/statistics/borrowinginvestments/

The interest is paid net of basic rate tax as with a building society account.

This type of investment is best suited to basic rate taxpayers who can tie up some money for a fixed period of time.

The Stock Market

All the investments referred to above are safe.

You cannot lose your capital. The same is true of putting your money in a bank or building society. Returns are not spectacular, but you take no real risk with your hard earned cash.

The stock market is different. Your capital is always at risk.

Your investment of £1,000 could be worth nothing in a year's time or it could be worth £10,000. The stock market crash of October 2015 has shown people how dangerous investing in it can be. The value of shares of many sound companies fell by half overnight.

Investing in shares yourself is a gamble and, if you are going to make a consistently good return on your money, it is a very time consuming hobby. But if you have the time and the nerve for it, you may do well.

There is a growing market in cheaply produced periodicals which allegedly give you inside information to help you make money on the stock market. These periodicals (commonly called tip sheets) are not cheap - £800 a year is typical - so you have to do well from them to make it worthwhile buying them.

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Investing In Shares

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