How to Invest Your Money Safely: A Practical Guide for 2025

The return component: equity ETFs

So, let’s talk about shares. They’re the part of your investment that actually grows over time, outpacing inflation if you play it right. You know, shares are that return component everyone talks about, but it’s not as simple as just picking a couple of companies and hoping for the best. Nope, it’s way smarter to go broad. Think globally diversified ETFs that cover around 1,400 companies across the world. That way, if one sector or region tanks, you’re not left high and dry.

Now, here’s a little nugget that can trip people up: stock markets fluctuate like crazy in the short term. One day you’re up, next day, not so much. But if you hang in there for the long haul — and we’re talking 15 years or more — you’re more likely to see gains than losses. Historical data suggests an average return of about six percent for these broadly diversified equity ETFs. That’s not a promise, of course, but hey, it’s a decent ballpark figure to keep in mind.

The security component: interest rate products

Okay, so shares bring the growth, but what about the safety net? That’s where interest-bearing investments come in. These guys give you a bit of security, with steady interest and way less volatility. Imagine you suddenly need cash, but the stock market is in the dumps — you won’t want to sell shares at a loss. Instead, you’d tap into these safer investments.

You’ve got a few options here. Call money accounts are like your go-to bank accounts where you can dip in and out anytime, just make sure they offer decent interest and are covered by deposit protection laws. Fixed-term deposits lock your money away for a set period, offering a fixed interest rate. But be ready to wait it out because you can’t touch that money until maturity.

Money market ETFs are a bit tidier if you want to put in a larger amount without constantly chasing the best rates. They’re convenient, and safer than shares, offering stability when you need it most.

A property can be a sensible investment

Now, some folks swear by property as an investment. Houses, flats, that sort of thing. It sounds solid, right? A tangible asset. But here’s the kicker: property isn’t just about buying and forgetting. It requires maintenance, dealing with tenants, and the market can be unpredictable too. Plus, you’re putting a big chunk of your assets into one spot, which isn’t the best for spreading risk.

Compared to ETFs, which are diversified by nature, a property is a bulk risk — you’re all in one place. So, sure, it can be a sensible part of a portfolio, but it’s not without its headaches and risks. If you’re cool handling that, go ahead. If not, maybe stick to more liquid and diversified options.

Which investment do we recommend?

Putting this all together can feel overwhelming. But the recommendation here is pretty straightforward: mix equity ETFs for growth with interest-bearing investments for safety. This combo gives you a balanced portfolio that can weather ups and downs.

Building it yourself isn’t as daunting as it sounds. With a few carefully chosen products, you can keep costs low and manage your investments independently. If you want to dig deeper into how to set this up effectively, there’s a helpful guide on how to invest your money safely that breaks it down step by step.

The delicate balance between risk and reward

It’s funny how people often want high returns but shy away from risk. The truth is, the two are inseparable. If you’re chasing six percent annual returns, as with those equity ETFs, you have to accept some market ups and downs. On the flip side, if you want near-zero risk, your returns will be modest, like with fixed-term deposits or call money.

Here’s a quick detour: many investors overlook the psychological aspect. Watching your investments swing wildly can be nerve-wracking, even if you intellectually understand it’s normal. Sometimes, the best investment is the one you can live with, because you won’t panic sell when the market dips. That’s a bit of wisdom that often gets lost in the numbers game.

Investment returns table example

Thinking long-term: patience as an investment strategy

Patience isn’t just a virtue here, it’s practically a requirement. The markets can test your nerve. If you jump ship at every dip, you’re almost guaranteed to lock in losses. Staying invested for the long term means you ride out the rollercoaster and benefit from the general upward trend of markets over time.

It’s like planting a tree. You don’t expect shade the next day. You water it, give it sunlight, and years later you enjoy the fruits. The same goes for investing. The sooner you start and the longer you hold, the better your chances.