There’s no denying that the world of investing can be very confusing for first timers (we blame the financial jargon)!
Luckily, we’re here to help, and we’ve got some investment tips to make things a bit easier for you and help you take control of your journey.
1.) Consider investing as soon as you can
By delaying your investment journey, you could be missing out on some positive growth — not ideal if you’re looking to maximise your potential profits. If you want to make the most of your investment journey, it could be worth letting your FOMO take over and urge you to invest.
The earlier you start, the sooner your money could grow, so consider joining the investment world as soon as you can.
2.) Invest as much or as little as you want
It’s often assumed that investing is exclusively reserved for men wearing grey suits. This may have been true some years ago but, fortunately, things have changed, and investing is now something that everybody can do.
Thanks to online investment platforms like Wealthify, you can invest from as little as £1, because a little can go a long way: invest £30 a month for 25 years, for example, and you could end up with about £18,529.1
3.) Think about what you want to invest in
If you’re just starting your investment journey, you’ll quickly find out that there’s a number of different investments available to build your portfolio, and it’s important to think about what you’d like to invest in. What investment types would you want to include in your portfolio? The answer will mainly depend on your attitude to risk.
At Wealthify, we offer five investment styles based on your risk level, from cautious to adventurous. You choose the style that suits you, and our investment team will build you an investment plan with the right mix of investments.
4.) Consider diversifying your portfolio
Regardless of your investment style, it’s always a good idea to try and mitigate your risk. If you want to limit potential losses, you could diversify your portfolio by spreading your money across investment types and regions. Think about it: if you invest all your money in one or two companies, you could be in for a nasty shock should these companies struggle.
Now, say you buy a number of investments, including different types (e.g. shares, bonds, property), and invest in different financial markets, the likelihood of losing all your money will decrease.
5.) Have a look at ISAs
With a Stocks and Shares ISA, you can invest your money in the stock markets and you don’t need to pay UK tax on any gains you make, meaning you get to keep more of your money at the end!
Every tax year, you can put up to £20,000 (subject to change) in your Stocks and Shares ISA; this is your ISA allowance, and you’ve got until midnight on the 5th April to use it. And since it’s not every day that you get presents from the government, it could be worth considering your allowance before the deadline passes.
6.) Start thinking about your pension
It’s never too early or too late to think about your pension. If you’re in your 20s, saving for retirement may not be your priority, but it could be a good idea to start planning ahead and get your finances in shape so you can take control of your retirement sooner rather than later.
If you’re in your 30s or 40s, now could be a good time to check how much you’ve got saved in your state pension and workplace pensions. Then start asking yourself some important questions like: will it be enough to retire? If not, is there any way you could maximise your retirement income?
If you’re looking to boost your retirement pot, opening a personal pension – also known as Self-Invested Personal Pensions (SIPPs) – could help.
7.) Go ethical if you want to
There are many ways to invest ethically. You can do it yourself and pick your own sustainable investments, but if it sounds like too much work, you can also choose to open an ethical plan that’s managed by experts on your behalf.
At Wealthify, our Ethical Plans ensure your money is invested in companies that are committed to having a positive impact on the environment and society. We use ethical funds (hampers full of sustainable investments) that are actively managed.
In other words, people who manage these funds, examine companies’ activities and policies and invest in organisations that either have excellent ethical standards or work very hard to improve their practices. And each company included in the fund is monitored on a regular basis, that way if an organisation lets its standard slip, it will be removed from the fund.
8.) Try to remain calm when markets fall
Financial markets are a bit like roller coasters: they have ups and downs, and as an investor, you need to accept that the ride will likely be bumpy. Of course, seeing markets go down can be stressful, there’s no denying it, but when this happens, it’s important to remain calm.
If you sell your investments, you’ll be making your losses real.
If you stay calm and resist the urge to sell, your losses will remain hypothetical – it’ll only be a number on your dashboard, so if markets bounce back, you could see the value of your investments go up and end up making a gain over the long-term.
If you try to time the market, however, and get out of the game when markets are falling, you could still miss out on the good days and the potential rebound.
9.) Think about the long-term
Let’s be honest, most of us don’t like to wait. In a world where you can get next-day delivery or watch TV on demand, patience is becoming rarer and rarer. And yet, if you’re serious about investing and want to maximise your potential profits, you’ll need to be patient and think about the long-term.
With that in mind, it's worth noting that if you invested in the FTSE 100 for any 10-year period between 1986 and 2022, you would have had an 88% chance of making a positive return.2
10.) Get help if you need to
Investing can feel daunting, but it doesn’t have to be. Thanks to digital investment platforms, like Wealthify, you can become an investor with just a few taps.
Simply choose the type of plan you’d like to open, how much you want to invest, the risk level that suits you, and we’ll do the rest, from picking your investments, to adjusting your plan, when needed, to keep it on track. Investing has never been easier!
1: This is the projected value for a Confident Plan (Medium Risk Plan). This is only a forecast and is not a reliable indicator of future performance. If markets perform worse, your return could be £12,455. If markets perform better, your return could be £29,873. Values correct as of 28/07/23.
2: Data from Bloomberg
The tax treatment depends on your individual circumstances and may be subject to change in the future.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.
Wealthify does not provide financial advice. Please seek financial advice if you are unsure about investing.