Investing can feel like a dangerous game for beginners. While there is risk to contend with, it’s not always as scary as it may seem at first.
Doing more with your money is an important step towards building your financial future. Whether you’re investing for retirement, your kids or simply to grow your wealth, knowing where to start is crucial.
Here’s a guide to help you begin your investment journey with confidence.
Understand why you’re investing
Before you start, take the time to define your investment goals. Are you looking for short-term returns or is your focus on long-term growth? Your goals will determine the type of investments that are right for you.
For example, if you’re looking for quick wins, learning the ropes of day trading may allow you to secure them. For retirement savings, stocks or index funds that grow over decades may be more suitable.
Build an emergency fund first
Any experienced investor would tell you to have an emergency fund in place. Save about two months’ worth of living expenses in an easy-access savings account, just in case you need to fall back on them.
This safety net ensures that you won’t need to sell investments prematurely if unexpected costs arise in your personal life.
Learn the basics
If you’re completely new to the financial markets, familiarise yourself with key concepts like risk, diversification and compound interest.
Risk is inherent in investing, but spreading your money across different asset types – such as shares, bonds and property – is a generally accepted way to help minimise it.
The magic of compound interest means your returns can earn more returns over time, making long-term investing particularly powerful.
Start small with what you can afford
You don’t need large sums to begin investing. Many platforms allow you to open accounts with as little as £1.
Starting with small, regular contributions should help to ease you in and give you time to learn the process without risking too much. Over time, even these small investments can grow into a substantial portfolio.
Choose the right platform
The investment or trading platform you use can have a significant impact on your experience. Look for one that offers low fees, user-friendly systems, a wide range of investment options and good customer support.
Some platforms tailored for beginners build and manage a portfolio for you based on your risk tolerance. This could be good if you’re not sure where to start.
Invest for the long-term
Markets can be volatile in the short term, but history shows that long-term investors often see positive returns. Resist the urge to check your portfolio daily or react to market fluctuations. Patience and consistency are key.
Seek professional advice if needed
If you’re unsure about where to start, consider speaking with a financial adviser. They’re specifically trained to help you navigate your options, assess your level of risk and ensure your investments align with your goals.
