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Black Friday: why you should invest your money instead of splurging

Black Friday: why you should invest your money instead of splurging
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Black Friday, the biggest shopping event of the year, is just around the corner. The day provides an opportunity to stock up on some of your favourite products, or products you’ve had your eye on for a while, for a fraction of the usual cost. But could you be better off skipping Black Friday and investing your money instead?

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, seems to think so.

Why should you consider skipping Black Friday?

If there’s something that you’ve been coveting all year, then buying it on Black Friday, when retailers typically price down their items, might seem like a sensible money-saving approach.

However, according to Coles, those Black Friday deals may seem less appealing a year later when the items you purchased have been collecting dust for months and some, such as tech gadgets, have been superseded by something newer, shinier and more advanced.

Even items that could have transformed your life, such as a lockdown dog, which was one of the most desired purchases last year, continue to be a financial burden.

Are you better off investing your money?

Coles seems to think investing is the way to go.

If you’d decided not to spend your money, and invested it instead, you could be far better off, and if you’d picked some of the runaway investment winners of the last 12 months, you could be thousands of pounds richer, she says.

For example, if you had put your money into the Legal & General UK 350 Index Fund, which tracks the 350 biggest companies in the UK, your money would have grown by just under a fifth since the last Black Friday. A £500 investment would be worth £590 now.

If the money you’ve been spending on your lockdown dog each month had gone into the fund, you could be sitting on around £1,250 right now.

There are many other investments into which you could have put your money and made a profit. For example, if you’d invested a combination of the huge cost of a Peleton exercise system and the ongoing costs of a lockdown dog into the Legal & General UK 350 Index, you’d have around £3,240 by now. 

Elsewhere, an investment of £500 in a high-performing fund like Global Schroder Energy, could have seen your money grow to around £820. And if you’d invested in a high-performing stock, such as publisher Reach PLC, it could now be worth nearly £1,100.

How can you get started with investing?

Investing has never been easier.

In fact, you can do it from the comfort of your own home using an online share dealing account. This is an account that allows you to buy a wide range of investments, including individual shares and funds.

Choosing the right share dealing platform is crucial to ensure you get good value for money. To help you narrow your choices, we’ve reviewed and rated some of the top share dealing account providers out there.

Here in the UK, we also have a government-approved tax wrapper called a stocks and shares ISA to help you invest your money tax-efficiently.

Are there any risks to investing?

Investing is inherently risky. The value of your investments can go up and down. You may even end up with less than you put in, especially in the short term. Over the long term, however, the market has an upward bias.

That’s one of the reasons why investing is more suited to people with a longer time frame to work with, say, five to 10 years. This will give your investments time to ride out any downturns and potentially grow.

Final word

As Sarah Coles points out, taking the investment alternative this Black Friday might not be as exciting as unwrapping something new and shiny. But it could leave you thousands of pounds better off down the line.

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