What should I do before I get started?
Before you buy shares or funds, it’s a good idea to:
Pay down any expensive debt with high interest rates such as a credit card or overdraft. Otherwise the interest payments would offset any investment gains. Read more about whether to pay down debt or save here.
Make sure you have a “rainy day fund” of between three and six months’ earnings. This is money for emergencies like your boiler breaking.
If you are still worried about investing, it is important to bear in mind that nothing is risk free when it comes to your money.
Investing: markets can go up and down
Saving: inflation can eat into your pot
Keeping your money in cash may feel the safest option but you’ll be losing money in real terms. The rising cost of living means your money won’t go as far in the future.
Questions to ask yourself
Make sure you understand what is motivating you to invest. Ask yourself:
What are my investment goals?
How long am I happy to leave my money tied up for?
Am I comfortable tying my money up in investments for at least five years? (if not, it might not be a good idea to invest)
How much can I afford to invest?
How much could I stomach seeing my fall in value along the way?
Can I hold my nerve and avoid selling if my investments drop? (you should wait for markets to rise again to avoid crystallising losses)
Steps to get started
Now you are ready to start investing. Here are some steps, which we go into in more detail in this article:
Choose an investment platform
Through the platform you can open a tax-free wrapper like an ISA or a pension
Decide on an investment strategy: DIY or ready-made?
Set a budget (start with a small amount of money)