Investing is not an easy one step process wherein you would go through one channel and expect to get high yields from it. There will be times when you would invest in a channel, such as the stock market, and there would be a high possibility that you would even lose money. That is why it is important to actually think about where you would invest your money wisely by factoring all of the things involved with an investment. Making an informed decision would be able to guarantee that you would be able to get the best yield on your investment. By determining and understanding all of the factors that go into an investment, you would be able to know the best channel(s) that would yield you higher values for your money; then you would be able to figure out the best way to invest your money that you worked hard to earn.
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Interest Rate Per Annum
For an ideal investment, of course, the higher the interest rate of return per annum, the better. But that is not always the case because of the extensive range of different investment channels available to the regular consumer. It is just a matter of piecing together the IRR you would get per annum and comparing whether if it is worth it with the amount of risk you would put your money in, and even the length of time that you would have to leave it untouched. For example, if you put your money in a saving’s account with a bank, you would be able to get an IRR per annum of only 2.5%, and how much the yield is would highly depend on the amount of money you leave untouched. Time deposits give higher yields of 8%, but it would require a longer investment period wherein you are not allowed to touch your money, or you would face certain penalties. The UK stock market has an average of 9% per annum but could also go as low as only 3% and as high as 20%, which makes it really unstable and unreliable. With Buy2LetCars, you would be able to receive a fixed of 7-11% of IRR per annum, depending on the amount of money you put in.
Initial Capital
With savings accounts, you would be able to earn a fixed 2.5% interest rate with low minimum monthly deposits of £1 up to £25, depending on the bank of your choice. The amount that you would earn at the end of each month would highly depend on how much money in total you have in your account untouched. For example, if you want to leave £1,000 in your account for you to be able to earn money, you should leave that amount untouched so that by the end of the year, you would get £25 without doing anything. Time deposits could give you higher yields but it does need a higher capital invested with most banks’ minimum value at £10,000. At Buy2LetCars, you would be able to start your investment with just a small capital of £7,000 and already start earning 7% interest per annum for 3 years, or a total gross gain of £164.69, or even enjoy a higher interest rate of 11% when you invest the maximum amount of £280,000.
Investment Period
You have the most freedom if you opt to choose for earning through savings accounts from banks. However, you still need to understand and be ready to earn much less than you would have expected if somewhere down the line you decide to withdraw from your account. Time deposits will hold your money for a span of 3 to 5 years wherein you would not be allowed to withdraw from it, or if you do, you would be faced with penalty charges. With the fast-paced stock market, you could easily pull out your money or put in more at any given period, but because of its instability, it might be hard to immediately get a high return without you having to put so much effort of keeping an eye on the investment all day every day. Even though Buy2LetCars would lock you up for a three-year investment, it would still be easy to manage and have a better grasp of your finances because the investment pay-out would be done monthly for a total of 37 months.
Risks Involved
All of the different investment channels have different kinds of risks involved. It is just a matter of which types and how much risk you are willing to take for you to have a good yielding pay-off at the end of your investment period. With Buy2LetCars, you would be listed as the owner of the car (with a unit costing £14,000), but give the rights for Buy2LetCars to lease it out. In the case that the company goes through bankruptcy, you are guaranteed of at the very least 85% of your initial investment back. But with their current track record and with the rising need for more people in the UK to have a car of their own to use but have bad credit ratings, Buy2LetCars will be at a peak to supply for a great demand.