The thought of investing can be very daunting to some people yet, with the right advice and guidance, investing can be a simple process and quite possibly very rewarding.
Here we have put together a simple guide to investing and the main points that need to be considered;
1. Have a Goal
This should be the easiest bit! If you know where you’re heading, achieving that goal is much easier, not to mention more rewarding.
Firstly, work out how much you want to save and when you want to have saved that amount by. This way you can work out how much you need to save and how often to help you budget. If you’re unsure as to how much you will need to save, sitting down with an Adviser, talking thorough your goals and budgets should be able to provide you with a clearer idea.
2. Have a clear understanding of the risks involved
This is one of the key fundamentals of investing.
Risk and reward go hand in hand however, whenever you’re looking to take risks it’s important to bear in mind that with greater risk comes the greater chance for losses as well as gains.
Different types of investments carry different types of risk, from low level risk such as savings accounts to high level risk investments such as emerging market stocks and shares.
You will need to accept some level of risk when investing. Many people are unaware that even basic savings accounts held with high street banks carry risk, for example the risk of default by the provider. No form or saving or investing can be considered completely risk free.
3. Diversify your Investments
You’ve heard the saying, don’t put all your eggs in one basket, well that’s exactly what we are talking about here!
The level of risk that you are willing to take will form some level of determining where you can invest and what you should invest in. Ideally, a range of different investments can by the key to providing a more beneficial return, this can help in times of unfavourable market conditions, minimise the risk of default as well as evening out returns over the long-term, hopefully preventing the risk of a large losses.
4. Understanding Charges
Very few things in life are free and so you surely won’t be surprised to hear that investing comes with charges. Don’t let this put you off however. The cheapest solution is not always the best, but you won’t be able to determine that unless you understand the charges involved – these are usually paid to both the fund manager (who manages your investment), and the platform through which you buy your investments.
5. Review your investments
Too many people fall into the trap of opening savings or investments and then forget about them. Like most things, the more you look after something the better the rewards. So, keep an eye on your investments, funds that have done well in the past may not necessarily carry on doing well forever. Your attitude to risk could change, your goals may become different or maybe a change in circumstances could mean that you have to alter how much you’re contributing to your savings.
You should hopefully have a brief idea about saving and investing and how important it is to review your holdings on a regular basis to ensure you’re on track to your goals.
If you are looking to invest, you already have investments that need reviewing or you would just like further information, why not get in touch?