Investing: Getting started

Investing is a great option to build wealth but so many people are too intimidated to begin. Historically, investing has had an average return of 10% interest per year (which is much higher than the 0.5% - 3% that savings accounts offer). Below are a few steps to get you thinking about investing and taking your next steps…

1. Open an investment account: you don’t need loads of money to open an account, and there are many different options for beginners or more advanced investors. It’s worth mentioning that in the UK you can invest via stocks and shares ISAs which allow your money to grow tax-free.

2. Investment goals: what are you investing for? How soon might you want this money? Are you risk-averse or do you want fast growth? Once you have an idea of your goals then you will be able to look for funds and stocks that match your values and objectives.

3. Focus on quality / avoid hype: Look for well-established companies with a strong track record of performance, and avoid companies with high debt levels and low profits.

4. Do your own research: Don’t just follow the trends of shares that friends or people on social media are shouting about. Most investment providers have information booklets containing top performing funds or stocks on their websites. You can also speak to advisors in these companies to get further advice and learn more about how to pick your investments.

5. Diversify your portfolio: Spread your investments across different countries, industries and asset classes (such as stocks, bonds, real estate, and commodities). This diverse portfolio will reduce your dependency on one stock or company and reduce your risk. You can invest in pre-made funds that already have a mix of different stocks preselected for you by an investment manager.

6. Keep an eye on the big picture: There are many short-term events that could affect the value of your investments e.g. a recession, but the stock market often bounces back quickly. Avoid making impulsive or emotion-led decisions based on these market fluctuations.

7. Be patient: Investing should be a long game, and it may take time for your investments to grow and reach their full potential. Check on your investments periodically (once a month or once per quarter) because if you check them too often, then you’re more likely to become affected by the short-term fluctuations.

Investing can be a great way to build your wealth but please make sure you’re doing your research and not taking big risks. Remember to be patient, as investing is a long-term strategy, and it may take time for your investments to reach their full potential. And remember to seek professional advice if you have any questions or worries.