If you’re looking to grow your money, your best bet is to invest rather than save. Investing might seem intimidating for beginners, with so many different things to learn and figuring out how to navigate the ups and downs of a volatile market, but it’s definitely a worthwhile venture to pursue.
This does not constitute advice and advice should be sought in all instances before acting on it.
One of the major advantages of investing is that you benefit from compounding. And the earlier you start your investing journey, the more compounding will be in effect. No matter how small your contributions are at the start, every little bit will help.
Are you considering investing? Here are our top tips for beginners:
Prepare with a plan
If you jump in headfirst without planning, you might end up floundering, unsure of exactly how to proceed. It’s important that you have a plan that not only includes what you want to achieve but how you expect to get there. This will help you stay on track and ensure your decisions are in line with your end goal.
Contribute what you can
You don’t need to start right away with a huge lump sum. You can start small and contribute only what you can afford while you work your way up toward increasing your contributions. Routinely contributing money, called pound cost averaging, will allow you to buy more shares when they are cheaper and limits the number of shares when they’re a higher price. Over time, this will help smooth out your portfolio performance.
Take advantage of your allowances
Don’t forget to fully utilise your Individual Savings Account allowance which resets annually. Investments inside an ISA grow tax-efficiently so more money goes toward your future goals, rather than to HMRC.
Patience is a virtue
Investing is a long-game. You won’t see the fruits of your investments until later down the line, so you will need to be patient. Don’t worry about short-term fluctuations, keep your emotions in check, and stick to your plan.
Diversification is essential
Diversifying your investment portfolio is one of the best ways to mitigate the risk associated with investing. Ensure you have a mix of assets so you can weather any storm the market finds itself in.
Review regularly
Investing isn’t something that’s done once and forgotten about until it’s time to cash out. You should regularly review your portfolio to ensure that your investments are still performing in line with your goals and that you adjust investments based on changing circumstances and attitude toward risk.
Have an end point in mind
To prevent feeling like there’s no end in sight to your investing endeavours, it’s important to figure out how long you can, or need, to wait before withdrawing your money. Depending on your goals and plans, this could be on the shorter side such as saving for education or a home, compared to a much longer timeline if you’re investing for retirement.
Stay the course despite a rocky road
As the stock market is filled with volatility, you will need to get used to the ups and downs that your investments will be subject to. Be prepared for the rocky road through a solid plan, a diverse portfolio, and regular oversight.
Work with a professional
If you’re unsure where to start or have questions about investing, it’s best to seek professional advice.
Dental & Medical Financial Services are here to provide you with the guidance you need to begin your investment journey and will continue to help you to make smart investment decisions throughout. If you’re ready to start investing or want to discuss your current investment goals and plan, get in contact today.
