Investor Today

News Story

Savers tempted to become investors need to understand risks

Monday 8th February 2010

By Mike Jones

Savers thinking of moving into funds or a stock market based product need to understand exactly the level of risk they are taking and what the downside might be.

That is the verdict of Annie Shaw of CashQuestions.com, who was commenting on Investment Management Association (IMA) figures suggesting poor returns on savings were tempting savers to become investors.

Shaw said: "While this is good news for the economy as investors put their money to work rather than simply leaving it in the bank, cautious savers should not be lured into taking more risk with their savings than they are genuinely comfortable with.

"Some stock market linked products such as guaranteed equity bonds that claim to safeguard capital can turn out to give remarkably poor value if index targets are not achieved by the fund. If inflation and interest rates start to rise, savers could also be left considerably worse off than if they had simply left their money in a savings account."

Have your say on this story using the comment section below