The UK’s self-employed population is one of the fastest growing employment sectors in the country. It has grown by almost 50% over the past 20 years. As a result, this group now makes up 15% of the national workforce and £230 billion worth of annual private sector output.
Since becoming self-employed offers numerous advantages for personal financial growth, this article examines 5 investments that can help you achieve your money goals as a self-employed worker.
Establish an Emergency Fund
An emergency fund is essential to any financial plan, particularly for the self-employed. Having a safety net of up to six months of your income saved, you can avoid taking on high-interest debt in times of financial hardship. This covers a sudden drop in your payment, a medical emergency, or sudden home repairs.
An emergency fund can avoid taking on high-interest debt and keep your debt-to-income ratio at a reasonable level. You can use online savings account calculators to determine how much money you need to save and keep in your emergency fund.
An ISA
An ISA is an excellent tax-free savings account allowing you to contribute up to £20,000 per year before you pay tax. Over time this can be high support even if you don’t contribute the full £20,000.
Choose an ISA that meets your needs and can be as flexible as you need it. Some ISAs only allow certain withdrawals per year, while others allow unlimited withdrawals, so check the fine print to ensure you know the rules.
Protect Yourself with Life Insurance
Life insurance should top the list of investments for any self-employed person. The self-employed may pay more for life insurance than their employed counterparts; however, this depends more on your circumstances than your actual employment, such as health status, age, and whether or not you are a smoker.
If you have dependents, you should consider taking out a more significant policy to provide for them financially in the event of your death. It’s also essential to look for a policy that will provide a death benefit to your dependents if you become disabled.
Create a Solid Investment Portfolio With Diversification
The self-employed should create a solid investment portfolio with plenty of diversification. This will help mitigate risk by balancing your portfolio with various investments.
Your investment portfolio should include multiple stocks, bonds, real estate, Commodities Trading and other assets. This will help to guard against the failure of any one investment type. This is particularly important for self-employed workers due to the risk of relying solely on a single source of income.
A Pension
Being self-employed, you should make contributions to a pension plan to ensure that they’ll have sufficient retirement funds. While this can be difficult for those who operate their own businesses, it’s still essential to make an effort. A pension offers you the security of knowing that you’ll have a regular source of income once you retire. It can also help reduce your overall tax bill by reducing the income you have to pay taxes now.
A pension is an essential investment for any self-employed person. It can help safeguard your future by providing regular payments once you retire.
Conclusion
The UK’s self-employed population is one of the fastest growing employment sectors in the country. Since becoming self-employed offers numerous advantages for personal financial growth, this article examines 5 investments that can help you achieve your money goals as a self-employed worker.
By implementing these investments for the self-employed into your financial plan, you can put yourself in a better financial position. This will allow you to make the most of your self-employed status and achieve your money goals.