The general market view of the sector in which your company operates.

• If the market views the sector negatively, the share price may fall, even if the company is doing fine.

The general market view of the geographical area in which your company operates.

• If your company operates solely in the UK, and the UK outlook is not so good, the share price may fall even if your company is doing fine.

The general market view of the global economy.

• If the market views the outlook for the global economy to be poor (eg 2008 financial crisis), the share price of your company may fall, even if the underlying business is still doing fine.

If you are interested in owning Unilever shares you may want to think about contributing to one of the Unilever Share Schemes – ShareBuy or SHARES. Refer to the Inside.Unilever portal for more information on these share schemes.

If you’re saving for the longer term (generally more than 5 years) then the returns you can achieve on ‘safer’ assets such as cash are unlikely to keep pace with inflation, meaning that, over time the real value of your savings will go down. Investing in shares gives you the potential to earn returns above inflation and maximise your returns in the long term.

Investing some of your money in shares can also provide some diversification away from other asset classes. This means that you’re not so exposed to one asset class performing badly and impacting on the entire value of your savings.

Investing for the long term is important when investing in shares as there are risks involved. Over long periods the stock market has consistently outperformed cash savings, however the value of your savings in shares will go up and down over time and can sometimes be worth less than if you’d invested in cash or put your money on the bedside table. By investing for long periods, you reduce the risk of getting less back than you put in and you give your investments the chance to recover when the value falls.

As mentioned, there are risks associated with investing in shares and you could get back less than you put in. But the following golden rules help reduce some of these risks:

1. Drip feed your money in – it can be very difficult to predict when will be a good time to invest in shares. By investing a small amount on a regular basis you can reduce the risk of investing all your money at a time when prices are high.
2. Spread your investments – it is very difficult to pick which companies shares will perform well. There are lots of factors at play here and even the professionals often get this wrong. By investing in a range of different companies’ shares you can reduce your exposure to the risk of a single company performing badly. You can invested in a range of different companies shares by investing in a share fund. These allow you to invest a little bit of money in each of the companies in the fund rather than picking a single company. The companies included in the fund will be picked by the fund manager but there are funds out there that are designed to track all the listed companies in the UK, this is known as the FTSE All share fund. You can find more information about share funds here. Investing in this way will help you spread your risk and smooth out some of the significant ups and downs you may experience by investing in a single company’s shares.
3. Invest for long periods – your share investments will go up and down over time but by having a long time period you are reducing the chances of getting back less than you put in and you’re also giving your investments time to recover from any falls in value.
4. Drip feed your money out – just like it’s difficult to know when to invest money it’s also difficult to know when is a good time to take your money out. You can avoid taking your money out on a day when the value is low by only taking out what you need and leaving the rest of your money invested. This will mean you don’t take all of your money out when prices are low and it also means you can invest your money for as long as possible.

After following these golden rules the risks of share investment are reduced but not completely eliminated. You need to be comfortable with the risks that remain before investing in shares.

How to do it – You can invest in shares directly or via a stocks and shares ISA (see below). For more information on how to invest directly, click here.

Fees – there are costs involved when investing in shares whether you do this directly or via a fund. When deciding to invest in shares you should compare the different fees involved and pick the option that best meets your needs whilst minimising the costs. More on understanding investment fees can be found here.

Stocks and shares ISAs – these offer an easy and tax efficient way to invest in shares. Before you decide to invest in shares directly you should read the section on ‘Stocks and shares ISAs’ to see if this is the best way for you to invest in shares, bearing in mind the tax advantages that are provided by the ISA wrapper.

Unilever Share Schemes – these schemes offer you a convenient way to invest in Unilever shares. There are some significant tax and other incentives on offer here which could mean that you want to take advantage of these share schemes before you invest more widely in shares. You need to bear in mind that, for these schemes, you are investing solely in Unilever shares so you are exposed to how Unilever alone performs. This does make these schemes more risky that share funds but you may be happy to take on the additional risk in light of the incentives available. For more detail on the Unilever Share schemes, click here.

The price of your bond at any time reflects the price at which you could sell your loan to another investor if you needed your money back before the end of the loan period. The price depends on a number of factors and how they compare to the circumstances under which you first made your loan:

The general market view of the strength/viability of the company/government.

• The better the market view of your company/government, the less chance you have of not getting your money repaid at the end of the loan term, so the bond price will increase as your loan will be more attractive to other investors.

The general market view of the sector in which your company/government operates.

• In other words, if the market views the sector negatively, the bond price may fall, even if the company is doing fine, as the risk of the company failing has increased a bit.

The general market view of the geographical area in which your company/government operates.

• In other words, if your company operates solely in the UK, and the UK outlook is not so good, the bond price may fall even if your company is doing fine.

The general market view of the global economy.

• In other words, if the market views the outlook for the global economy to be poor (eg 2008 financial crisis), the price of your bond may fall, even if the underlying business is still doing fine.

The general market view on inflation and interest rates.

• If the outlook for inflation increases, your fixed interest payments will not be as valuable, and neither will the return of your money at the end of the loan period, so the price of your bond may fall.
• If the outlook for interest rates increases, again your bond may fall, as the fixed interest rate you have agreed will look less attractive compared to others available at that time.

Bonds offer a predictable income stream and preservation of capital if held to redemption. The expected returns from bonds are higher than cash but lower than shares reflecting the fact that they are less risky and less volatile than shares. They may therefore be suitable for investors who are risk averse or do not have a very long timescale for investing.

Investing some of your money in bonds also helps to provide some diversification away from other asset classes. This means that you’re not so exposed to one asset class performing badly and impacting on the entire value of your savings.

As mentioned above, the price of a bond will go up and down depending on the level of inflation and interest rates. This can be a concern if you decide to sell your bond before it matures but if you hold it until the end, then you will receive a return of your capital.

The main risk when investing in bonds is the risk that the issuer (either the Company or Government) defaults. This would mean that they may not be able to meet the coupon payments or return your capital at maturity, however in this event, bondholders have a better chance of being repaid than shareholders.

How to do it – You can invest in bonds directly or via a stocks and shares ISA (see below). For more information on how to invest directly or via funds, click here.

Fees – there are costs involved when investing in bonds whether you do this directly or via a fund. When deciding to invest in bonds you should compare the different fees involved and pick the option that best meets your needs whilst minimising the costs. More on understanding investment fees can be found here.

Stocks and shares ISAs – these offer an easy and tax efficient way to invest in bonds as well as other assets. Before you decide to invest in bonds directly you should read the section on ‘Stocks and shares ISAs’ to see if this is the best way for you to invest in bonds, bearing in mind the tax advantages that are provided by the ISA wrapper.

Premium bonds are essentially an investment that doesn’t pay interest but does give you a chance to win tax-free cash prizes. This means that the ‘interest’ you earn is effectively decided by a lottery and there is no regular or guaranteed income generated. You can win between £25 and £1 million on each premium bond in monthly prize draws, each bond has an equal chance of winning so the more bonds you have, the better your chances. Currently the average return that this results in per premium bond is around 1.40% pa. You do however need to bear in mind that this is the average return, in reality you will either win a prize or not, so you could end up getting no return on your money. In fact, there is only a very small chance of winning the top prize and most people do not win enough for their investment to keep pace with inflation.

You can invest up to £50,000 in premium bonds and the minimum investment size is £25. You need to be over 16 to purchase premium bonds but they can be bought for children under 16 as long as there is a nominate guardian eg a parent.

Any ‘interest’ (or prizes) that you earn on your premium bonds are tax free, this is less of an attraction following the introduction of the £1,000 interest allowance introduced in April 2016 but it could still be attractive to those with large amounts to invest who have used up their interest allowance.

The capital invested in premium bonds is backed by the Treasury so these can be viewed as very low risk investments. Unlike corporate or government bonds, the amount of capital you get back when you sell your premium bonds is not affected by inflation or interest rates, so you can get your money back at any time. However, because there are no guaranteed returns on premium bonds the real value of your investment is likely to be eroded by inflation unless you have won significant ‘prizes’ whilst holding your bonds. This means that your money is unlikely to have the same buying power over time, this can be a problem when investing for long periods.

More information on premium bonds and how to invest can be found here.

The best known and most practised form of property investment is buying the house you live in. Whilst some may argue your house should be seen more as somewhere to live and not an investment, as a home-owner your finances are linked to the value of your house.

It would appear that the days are long gone where you earned more in a year from the increase in the value of your house than you did from your job. With property prices generally stagnating, your home is more than ever just that – somewhere you live, and not the road to vastly increased wealth.

Of course, that is not to say that you shouldn’t choose carefully the home you buy. If you are buying now and expect to move again in a few years, you should have at least one eye on its investment potential. Do not indulge in too many improvements that don’t have a similar increase in the likely sale price of your house.

But if you are buying to live there for the foreseeable future, you should be choosing a home you like the idea of living in and be happy to upgrade the kitchen/bathroom - etc because it makes it more enjoyable to live there, even if the impact on the value of your home is more muted.

Buy-to-let is where you buy a house, but someone else lives in it and pays you rent.

The number of private landlords is still increasing in the UK. But the money needed as a deposit has increased (often to at least 25% of the price of the property and around 40% of the price of the property needed to get the best buy-to-let mortgage deals). Also, the number of lenders willing to offer you a buy-to-let mortgage has fallen, so the interest rates on offer are nowhere near as attractive as those on offer to buy your own home. Add in large arrangement fees and the returns from buy-to-let may be lower than you expect.

Even if you have the deposit needed and find a reasonable deal, there are many other things that will impact on your potential return. Repair and maintenance costs, insurance, periods when your property has no paying tenants (known as voids) and management fees all reduce your overall return.

Whilst we are not saying buy-to-let is a bad idea, you need fully to be aware of the costs that will eat into your return. There are still reasonable returns to be had, provided you pick the right property in terms of cost vs likely rent, the right mortgage (if you need finance) and the right area to minimise voids and maximise rental income. Across the UK the yield after costs can vary, but 5% per year is typical.

So buy-to-let can produce a steady income, and certainly more than you can get on savings alone, but it comes with some strings – it will need a large chunk of money, you need to be prepared to tie your money up, and accept the hassle that comes as a landlord (or be willing to pay a managing agent to do this for you) which will eat into your return.

For more information on buy-to-let, read here.

If you like the idea of buy-to-let, but are put off by the likely hassle, the issues above, or simply because you do not have the sort of money needed for a deposit, you can still get exposure to buy-to-let using a REIT (pronounced “Reet”). REITs are listed on the stock market and pay regular dividends (assuming they remain profitable). Like any listed investment, it does mean it is easier to invest and then sell should you need to.

REITs were created in 2007 and have tax advantages such that many sizeable landlords throughout the UK converted to REIT status. Some well-known FTSE 100 property companies are in fact REITS.

Note however, that REITS do not invest solely in residential property – many will own offices, shops and industrial sites. You need to do your homework and check what each listed REIT actually owns to make sure you are investing in the property sector and geographical location you are interested in.

There are some differences between the way dividends work compared to holding the shares of other listed companies that are not REITs, but you can offset any tax issues by holding them in your stocks and shares ISA.

If you fancy getting property exposure via owning shares in a REIT you should do some more research. A useful starting point is the REITA website, part of the British Property Foundation.

Like any asset, the price of property can go up and down, and there may be bubbles or periods where prices become over inflated and then suffer a drop to return them to a more long term average.

Many commentators believe property around the world (including the UK) remains over-priced due to the over-supply of cheap credit that led to the credit crunch still not having fully worked through the system. Whilst in some countries house prices have dropped back towards long term trends, some countries appear to remain in bubble territory. See Economist index here for one view.

And try here (again the Economist) to see how these trends have behaved over last 30 years including useful ratios such as prices to average earnings and prices to average rental values.

If you own a property and all you need is the annual income and not the capital sum invested, then you may not be too concerned if property values fluctuate. This is assuming the rent remains reasonable compared with the original buying costs of the property. If prices do fall, then the rental value may also fall, but assuming the property remains let, you will still be getting an income, albeit it may be lower than you hoped for.