Best Strategies for Saving and Investment: How to Build Wealth Over Time?

zubairrafay02

Hey everyone,

I'm relatively new to saving and investing, and I wanted to get some insights from experienced members here on the best strategies to build wealth over time. There are so many options out there, and it can be overwhelming to know where to start.

Here are a few questions I have:

1. What’s the best approach to saving money in the short term? (e.g., emergency funds, savings accounts, etc.)

2. When is the right time to start investing, and how should a beginner approach it? (I’m thinking about stocks, bonds, or maybe mutual funds.)

3. How do you balance risk vs. reward in investments? Any tips for managing risk, especially when starting out?

4. What are some common mistakes beginners make in saving and investing that I should avoid?

5. Should I prioritize paying off debt before investing, or can both be done simultaneously?

Any advice on how to grow wealth gradually while staying financially secure would be much appreciated! 😄

Thanks in advance!

masonic

One of the most important things is to save around 3-6 months living expenses in accessible savings before starting to invest. This will serve as a safeguard against being forced to sell investments if you lose your job/other income or have unplanned expenses that you need to cover. You might need more than this depending on your circumstances. Beyond that, you need to consider your investment horizon and attitude to risk. If you are young and intend to hold your investments for decades, then you could opt for high high percentage in equities, 100% equities would be appropriate if you were comfortable with that level of risk (e.g. 30%+ drawdowns). If you are investing gradually from income over many years, then what happens in the early years is insignificant - a severe crash would be a good thing as you'd have relatively little invested already and could buy cheap.

Whether or not to prioritise debt depends on the interest rate you are paying on it. Several types of debt can grow faster than your investments so it would make sense to pay those off first. You probably would not prioritise paying off 0% credit card debt, student loans, or your mortgage before starting to invest.

The main things to avoid I suppose are paying too much in fees (this can severely stunt returns) or investing speculatively based on hype, social media tips, etc. For most people a boring low cost global index or multi-asset fund would be the best place to start.

Eyeful

1. (a) Savings means cash in the bank/building society(Low Risk)

    (b) Investing  think shares, bonds, gold etc. You are putting your money at higher risk of loss but hoping for a larger gain. There is no guarantee you will win.
    

2. Use tax shelters wherever possible (a) Pensions (b) Cash ISA's (c) Stocks & Shares ISA's

3. Have an emergency savings account to cover at least 6 to 12 months of household bills and car/boiler break downs.

4. Any money you know you will need within 5 year should be held in either

(a) NS&I, where it is protected 100% as you are loaning  money to the UK Government. 

(b) Bank or building Society Account on the FSCS list where it will be protected up to £120,000.

5. Before investing make sure you have first cleared any high interest debt such as credit cards etc.

6. Anything to do with money will have some form of risk attached,
All that changes is the size & type of risk.
That includes low risk savings accounts.
Here the risk is inflation, this is where the same amount of money buys less as time goes on.
RPI % graph (1948-2025) -- gov.uk
https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/czbh/mm23

7. Best savings Rates:
https://moneyfactscompare.co.uk/savings-accounts/

8. Investing is for money you  will not touch for at least 10 years.
The longer invest the higher your odds of winning the game.

9. Academic research repeatedly shows that most "active fund managers" after charges are applied,

    do not beat a MAJOR  GLOBAL WORLD INDEX like the FTSE All World or ACWI.

10. You can make investing as simple or as complex as you like.
Those that want to make a lot of money out of you, like to make it sound complex.
They do not want you to DIY but  depend on them.
 Complex just costs more money, takes more time and is more difficult implement.
It does not mean it will do any better than simple.  

11. SIMPLE INVESTING IN DETAIL (advantages, easy to understand  & implement)

(a) First watch this: https://www.kroijer.com/

(b) Then read these:

 https://monevator.com/passive-fund-of-funds-the-rivals/

https://monevator.com/best-global-tracker-funds/

12. Use Pensions for their tax advantages & very long term investing.
Next best is S&S ISA's.
Suggest you ignore GIA's 

13. Common mistake newbies make is
(a) Going into the markets when all the news is good (at or near their peaks)
(b) Leaving the markets when all the news is bad (when markets fall heavily or collapse) .
Usually never to return. Or come back when all the news is good.
This makes sure they have locked in there losses

14. Remember there is no such thing as a "FREE LUNCH", someone has to pay for it.
Business's will make sure its not them but you.

15. Investing when done the correct way, is as exciting as watching paint dry.

16. As for the correct risk vs reward balance each one of us is different.
Just remember this and you should be OK::
"Your investments should never make you worry or lose sleep at night. If they do, the risk level is set too high and needs to be reduced".

17. In the UK to give financial advice requires you to have the correct qualifications.
All you will get on this forum & other places is guidance..

18. Suggest you bookmark this:
https://www.fscs.org.uk/check/

Hope this has been of help to you.

El_Torro

Lots of big questions there. This forum is a great place to find answers to all of them. Personally I will just address the headline question for now:

The best way to build wealth over time is to invest as much as possible as early as possible. It's a numbers game unfortunately, there is no reliable get rich quick scheme when it comes to investing in the stock market. Stick all your money in a diversified portfolio (a single global tracker that is 100% equities will do the trick, though many people like to mess around with the formula and make it more complicated) and then wait a few decades. If you do this then your wealth should grow significantly above inflation over the long term. 

I said I would only address the headline question but there is a very important point to bear in mind: While investing in 100% global equities is the most reliable way to build your wealth the return is also very volatile. The value of your investments will go up and down over the years. If you have a period of value drops, even if it lasts a few years, don't be disheartened, stay invested and eventually the investments will do well. Stock market investing should be looked at over the long term, at least 10 years.

There are various nuances to bear in mind but that's basically it. 

InvesterJones

zubairrafay02 said:

Hey everyone,

I'm relatively new to saving and investing, and I wanted to get some insights from experienced members here on the best strategies to build wealth over time. There are so many options out there, and it can be overwhelming to know where to start.

Here are a few questions I have:

1. What’s the best approach to saving money in the short term? (e.g., emergency funds, savings accounts, etc.)

2. When is the right time to start investing, and how should a beginner approach it? (I’m thinking about stocks, bonds, or maybe mutual funds.)

3. How do you balance risk vs. reward in investments? Any tips for managing risk, especially when starting out?

4. What are some common mistakes beginners make in saving and investing that I should avoid?

5. Should I prioritize paying off debt before investing, or can both be done simultaneously?

Any advice on how to grow wealth gradually while staying financially secure would be much appreciated! 😄

Thanks in advance!

What's your goal? What are you building the wealth for and when? Also what is your current financial situation? How is your pension looking?

QrizB

OP did you write that yourself? It has several hallmarks of something an AI would put together.

artyboy

QrizB said:

OP did you write that yourself? It has several hallmarks of something an AI would put together.

Totally. All it's missing is the cutesy icons and a few more em dashes!

Rollinghome

zubairrafay02 said:

Hey everyone,

I'm relatively new to saving and investing, and I wanted to get some insights from experienced members here on the best strategies to build wealth over time. There are so many options out there, and it can be overwhelming to know where to start.

Here are a few questions I have:

What’s the best approach to saving money in the short term? (e.g., emergency funds, savings accounts, etc.)

A cash savings account is the safest. See https://moneyfactscompare.co.uk/savings-accounts/ for the best rates.

When is the right time to start investing, and how should a beginner approach it? (I’m thinking about stocks, bonds, or maybe mutual funds.)

If you are just starting, now. The younger you are, the better. Any mistakes you make will less expensive. Move a lump sum in gradually, if you prefer. 

How do you balance risk vs. reward in investments? Any tips for managing risk, especially when starting out?

Equities are likely to give the best return but with the most volatility. Volatility is part of investment and why returns are better. You can reduce volatility with diversification into bonds, cash etc., but the younger you are, the less likely that volatility will harm the eventual outcome. You need to decide what impact a fall in value would have on you and invest accordingly. A global index-tracking fund over the long term is likely to equal or beat the returns of most professional investment managers, and luckily, is the least costly way to invest. Try not to be too ambitious at the outset and avoid complexity.

What are some common mistakes beginners make in saving and investing that I should avoid?

The most common is to underestimate the effect of high investment costs. You could expect a long term average return on equities after inflation of about 6-7% or so. If your total costs were just 1.5%, you would be losing a quarter of your returns. Luckily, you can buy global index trackers for an annual management charge of 0.12% or so. Then you need to ensure you don't pay too much for the platform you use, or any other charges, and minimise tax paid by using ISAs and pensions.

Should I prioritize paying off debt before investing, or can both be done simultaneously? Unless borrowing for substantially less than the returns from investment, then re-paying debt should be a priority for most people.

Rollinghome

QrizB said:

OP did you write that yourself? It has several hallmarks of something an AI would put together.

Especially as their other post recommends "You can also check out familylawyerskarachi.com for more guidance on your situation".

phlebas192

QrizB said:

OP did you write that yourself? It has several hallmarks of something an AI would put together.

Whoever or whatever the OP is, the reference to "mutual funds" shows that they/it haven't even bothered to understand that this is a UK focussed site.

Eco_Miser

phlebas192 said:

QrizB said:

OP did you write that yourself? It has several hallmarks of something an AI would put together.

Whoever or whatever the OP is, the reference to "mutual funds" shows that they/it haven't even bothered to understand that this is a UK focussed site.

Or possibly that all their research so far has been on US focused sites.