Investing can be a great way to grow your money over time. If you’ve decided to enter the world of investing but don’t quite know where to begin, this guide outlines six key steps you could take when beginning your investment journey…
1. Identify your goals and how much you’ll need
Why are you investing? To buy your dream home? To help your kids through uni? To simply help secure a better financial future? Identify your goals and work out how much you need to achieve them.
2. Learn about the various types of investments
You don’t have to be a financial expert to invest, but you need to know the basics and understand the different options available to you. Take the time to educate yourself on investing – to start with, check out our jargon buster. The Money Advice Service also has lots of impartial information on how you can invest your money.
3. Figure out monthly payments
Sit down with your partner and work out how much you can afford to invest each month. Be realistic – there’s no harm in wanting to reach your goals quickly, but don’t put yourself under unnecessary financial strain. Get a glimpse of what you might get back if you invest in a Stocks and Shares ISA using our tool.
4. Decide the level of risk
Investing isn’t without its risks, and the level of risk you’re willing to accept will depend on things like your age, income and goals. You need to balance the greater potential for long-term growth with the impact on your financial situation should you lose money. Our article explores risk in more detail.
5. Find an investment to suit your needs
It’s vital to do your homework when it comes to investments; decide what’s most important to you, and pick a reputable provider who has the right investment plans for you and your goals. As a first-time investor, you may want to seek the help of an adviser who will help you choose the option to best suit your circumstances (bear in mind that you’ll have to pay for this advice). Also, it may not pay off to put all your eggs in one basket, so consider spreading your money across a number of investment options – known as ‘diversifying’ – as a way of minimising overall risk in your portfolio (the collection of investments you own).
6. Enjoy the ride
Application accepted? Time to set the wheels in motion! Once you’ve set up a direct debit, it’s important to regularly review your investment to ensure you’re on track to achieving your future financial goals.
Visit our investment pages for more information.