Things to consider While cash deposits may provide security of your money, risk-free. Capital loss can occur, particularly in a volatile or capital*, as well as instant access, income from cash interest rate environment. It is important to remember will fluctuate according to interest rates. In low interest that there is a hierarchy or risk/return potential within the rate environments, cash may provide very little income. asset class, according to the perceived creditworthiness This can be especially detrimental to purchasing power if of the issuer – in other words, how likely it may be to the rate of inflation is higher than interest rates, as your default on the loan. Also, while the amount of income capital will be growing more slowly than the price of the payable is fixed by the coupon, the value of the income goods you wish to buy with it. (the yield) will fluctuate as bond prices go up and down in the marketplace. Higher levels of income may be available to those willing to invest in other financial assets. However, using cash Considering commercial property to buy other assets that may potentially generate higher Commercial property offers the potential for both income income will mean taking more risk. growth (through rent reviews) and long-term capital Considering equities growth (through rising valuation of the property). However, there is also potential for capital loss, and although the Equities offer the potential for rising income over income stream could be fairly stable due to regular, fixed time through dividend growth. However, income is not rent payments, it is not guaranteed. The length of time guaranteed and equity prices can fluctuate considerably that can be involved in buying and selling properties in the short term. This means that, although there is makes this a less flexible asset class than equities and potential for significant capital gain, equity investors bonds, in terms of access to your capital. must think carefully about their time horizons and capacity for capital loss. *Up to £75,000 of your money is secure in a bank or building Considering bonds society through the Financial Services Compensation Scheme, unlike stocks and shares or fixed interest investments which are Fixed income securities or bonds, typically offer less less secure. potential for income growth than equities, but more certainty and regularity in terms of knowing the amount of income you should receive. However, bonds are not 11