Top 10 rules for investing
- 3 min reading time
Are you ready to invest? Before you get started, here are our top 10 rules for investing.
FIND OUT ABOUT YOURSELF
Have you asked yourself the important questions? Where are you financially today and what are your plans for tomorrow? The answers will help you determine your life stage, for how much time you can afford to put the money aside and how much risk you are comfortable taking. Only then will you know which investments may be right for you.
KNOWLEDGE IS AN ASSET
With so many types of investments on offer, a great place to start is to familiarise yourself with the various options. Begin by reading about the pros and cons of each type of asset and vehicle and read our guide to getting started. You can also discover the benefits of blending your portfolio assets here.
AVOID MAKING ASSUMPTIONS
Brands work hard to portray a certain image to investors. However, if you would like to invest in a particular share, fund or bond, it’s wise to do some homework. This will give you a true picture of the company’s strengths and weaknesses. Read our article on researching companies for more information.
TAKE A LONG-TERM VIEW
Evidence suggests buying and holding investments is the best approach. You can learn more about why it’s best to ‘buy and hold’ here.
Quite simply, diversification can be summarised with the old adage: ‘Don’t put all your eggs in one basket’. By creating a portfolio which contains a mix of high and low-risks assets, you can protect yourself against market volatility, while maximising potential returns.
KEEP SOME CASH TO HAND
Selling investments can take time, so having some cash in your portfolio means you can access money quickly and take advantage of any investment opportunities that come along. Find out why you need cash in your portfolio here.
DON’T SET AND FORGET
Building an investment portfolio isn’t a one-off exercise. Check your investments regularly to make sure you’re happy with your decisions – and on track to reach your goals. Read more about how to manage your portfolio effectively here.
CONSIDER EXPERT HELP
If you want expert advice you could talk to a professional adviser. You could benefit from their knowledge and experience, as well as their ability to look at the big picture. To help you decide if you want to seek advice or ‘go it alone’, read our article here.
WATCH OUT FOR COSTS
As an investor, you can expect to pay fees along the way. These charges – often a percentage of how much you’re investing – might seem low, but they can add up. Read our article to discover how you can keep on top of costs.
UNWRAP TAX EFFICIENCIES
Depending on how well your investments perform, you may need to pay tax. You can protect your profits from capital gains tax and dividend tax by using tax wrappers such as ISAs and other legal tax-efficient methods. Learn about Stocks and Shares ISAs here.
Any information provided should not be considered personal advice. Past performance is not a guide to future performance. You may not get back the full amount you invest. If you have any doubts about making your own investment decisions, seek financial advice. Tax treatment depends on individual circumstances and may be subject to change in the future. The information given is not intended to provide legal, tax or financial advice.