If you’re new to investing, this corner of the financial world can feel intimidating and bewildering, but don’t let that put you off. Finding ways to grow your money is often a shrewd move, and it’s more accessible than you might think. However, the number of individuals who invest in stocks and shares varies widely between countries. For example, 55% of American adults invested in the stock market in 2018, while only 12% of British people have invested in stocks (preferring instead to leave their money in low-interest cash accounts). When exploring who invests, and who doesn’t, there are also big differences between socioeconomic groups – there’s even a considerable gender gap between male and female investors.
If you’d like to start doing more with your money, it’s important to remember that the stock market is open and accessible to everyone. While investment presents more risks than leaving your money in a cash ISA, it also offers far greater rewards. To help you kickstart your investment journey, we’ve distilled our three top beginner-friendly investment tips…
Investment tips: Getting started
Ready to nurture your finances more actively? Here are three helpful starting points…
1. Know your options
There are lots of different avenues to consider when you start exploring how to invest your money. This is part of what can scare new would-be investors away. However, there are lots of helpful guides available that explain your options simply and succinctly.
These beginner friendly investment tips include a handy breakdown of common investment types including money market accounts, share trading, index funds, forex (foreign exchange) trading, and property investment. Take some time to explore these different routes and assess which is right for you by considering how much risk you’re happy to accept your current resources, and the level of support you’d prefer.
2. Consider using a fund
If you’re keen to invest in stocks and shares, it may be wise to begin your journey by using an investment fund. These funds are operated by a fund manager who selects which stock and shares to buy and sell (there are also online “robot” funds, driven by algorithms which you might like to explore).
This approach removes the responsibility of selecting investments from you and places these decisions in the hands of an individual (or program) with much greater knowledge of the market. Another benefit is that this “flavour” of investing allows you to buy lots of different stocks and shares more affordably. This is because your finance is pooled with that of other investors. Although funds aren’t free to use, this approach can give new investors a portfolio with much greater reach and spread.
3. Spread the risk
Or, in other words, don’t put all of your eggs in one basket. If you are considering “going solo” with your investments, this is an important tip. You may have heard of people “diversifying their portfolio” – and that’s exactly what this concept is all about. By investing in lots of different companies and propositions, you reduce the risk of losing everything if one business fails. In an ideal world, a diverse portfolio will include great investments that negate any losses incurred by investments which performed poorly.