Monday, June 24

A Beginner’s Guide to Investing

A coin tree growing in different phases.

Investing sounds scary to anybody who hasn’t tried it out before. It seems like a lot of work for minimal returns and is potentially risky. But it isn’t what it’s made out to be. In fact, you don’t even need to be an investment expert to be able to try it out. Here’s a beginner’s guide with everything you need to know to start your investment journey.

Open an investment ISA

Stocks and Shares ISA accounts are one of the best ways for complete beginners to enter the world of investment. It’s the easiest way to begin investing, and here’s why. With a stocks and shares ISA, all you have to do is pay a small fee, add your initial investment amount and then watch your money (hopefully) grow! There are many experts behind the scenes who will take care of the money and help you to get the maximum gains possible, by investing portions of your money into different places, and moving it around as the stocks and shares market changes. All the hard work is taken off your shoulders, and you can sit back and relax, knowing that your investments are doing the work for you.

Understand the risks

There’s no such thing as a ‘risk-free’ investment. So you need to understand the risks that can come with investing before you commit. Of course, the same way that your investments can return gains, they can also sometimes bring losses. If you are investing yourself, without the help of a management company, it’s important to understand the stock market and its trends. The better you understand the patterns, the better you will be able to predict any drops or rises in the markets. There are many online courses and videos that can help you if you’re just starting out. If you use a management company to help you invest, the risks are still there, but they are much smaller, because the knowledge of the experts that will be helping you invest is much greater. As long as you understand that there can be risks in investing, you are good to go.

Know What’s Best For You

Investing might not be right for everybody. You need to consider all your options, your financial situations and circumstances, and decide whether investing is a viable option for you. It is important that you are clear with yourself as to how much money you can afford to invest, and more importantly, how much money you can afford to potentially lose before you take your money out. You also need to decide if you are wanting to invest short-term, or long-term. With short-term investments, you want to make sure the risk is as low as possible, however with long-term investments, the risks can be slightly higher, as there is a longer time period for stocks and shares to fluctuate and change, so you could lose money in the first years, but then gain over double your initial investment over the next 3 years.

As long as you understand what it is you want to get out of investing, your limits, and how much risk you are willing to take, then you are ready to start investing.

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