New to investing

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Are you ready to invest?

  • 3 min reading time
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Before you begin investing, there are some important decisions to make – from what you would like to achieve in life to how much risk you can afford to take with your money.

What you will learn

  • How to prepare for investing
  • What questions you need to ask
  • How to find expert help if you need it

You may be ready to start your investment journey, but how can you make sure you’re setting off in the right direction? We look at four essential steps that will help you get on the correct path.

Get ready to invest

Before you invest for the first time, it is important to lay some groundwork. That means looking at your existing debts and focusing on paying off any high-interest credit cards bills or loans.

It can take time to sell investments and get access to your money, so it’s essential to put some savings aside for a rainy day – usually this is enough to cover living expenses for a few months.

Then it’s time to think about why you want to invest. What goals are you saving for in life? And, now you have spare cash, for how long can you afford to invest it?

Did you know?

Saving for a house deposit is a common reason to invest, but it’s becoming more of a challenge. In Scotland, you can now expect to pay 5.3 times your annual earnings for your home, on average – up from 4.9 in 2012.

Choose a strategy

Having a clear understanding of your goals will help you decide whether you are seeking investments that provide an income or growth (you can read about the difference between income and growth here).

That means asking yourself:

  • If you are seeking a regular income from your investments?
  • Would you prefer to leave your investment to grow over time?
  • And, do you know which types of investments can give you an income, growth or a combination of the two?

Decide on a level of risk

Every investment carries a degree of risk. As a rule of thumb, riskier investments offer the potential for better gains but also a higher chance that your investments might go down in value

Finding the right level of risk for you means asking yourself

  • How comfortable are you with risk?
  • How much can you afford to lose?
  • How long would it take you to recover from a loss?
  • For how long can you put your money away for?
  • Could you still achieve your investment goals by taking a more cautious approach?

Seek expert help if you need it

It’s also important is decide whether you will manage your investments yourself or if you want to seek expert advice. You can read about the pros and cons to both approaches here.

However, there are four points to consider:

  • What is your level of investment knowledge?
  • How much time do you have to learn about and manage your investments?
  • Would you find it stressful to make investment decisions in what can be a fast-moving marketplace?
  • Is the amount you are planning to invest enough to justify the level of fees that an adviser would charge?

The cost of advice varies – but the average hourly rate for financial advice in the UK is about £150. You may also be charged for a set piece of work or a regular fee based on the amount of money you want to invest.

The above information is not exhaustive, but it will help you think about your reasons for investing, your personal goals and your preferred approach, so you can begin to make informed decisions about your money.

Risk notice

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

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