Am I ready to invest?
Our guide to getting started in the world of investments.
The world of investing can seem daunting, and it's true that there’s a lot to learn if you want to become a successful investor.
But there are simple ways to start investing without needing to be an expert. Let's go through through the basics.
Who can invest?
Anyone. It's a common misconception that only very wealthy people can invest. In fact, that's one of many myths about investing that put people off. In reality, you can make an investment with a relatively small amount of money.
Should you save or invest?
If you have extra cash left once you've paid off any debts and paid all of your outgoings, you have 2 options: save or invest. One could be better suited to you than the other – it all depends on your circumstances.
If you think you’ll need to access your money at short notice, or you’re thinking of using it to buy something like a car or holiday, saving your money is probably best. This is because savings are easier to access and much lower in risk. The downside is that you’ll probably only make a small amount of interest on the money you save.
If your goal is longer-term such as saving for retirement, it's possible to generate a greater return on your money by investing it – although the value can also go down and it's possible to lose some or all of the money. This is why people who invest tend to make sure they have some cash saved before they invest, just in case.
Want to learn more about what you should think about before investing? We recommend that you speak to a financial adviser beforehand. They’ll be able to consider your circumstances and give you personalised advice. You can find a financial adviser in your area at www.unbiased.co.uk. Please consider that an adviser will charge for their advice.
How much money do you need to start investing?
In this video, Alistair McQueen, Head of Savings & Retirement at Aviva, explains how much you might consider investing, depending on your income, goals and personal circumstances.
How much should you invest?
Transcript for video How much should you invest?
Chapter 2: How much should you invest?
This video is for educational purposes only. This should not be viewed as advice or a recommendation to invest.
Knowing how much you can invest can feel like a bit of a roadblock. So, let's clear up just how much, and how little, you can invest to get yourself started.
When it comes to investing there's honestly no right or wrong amount, it's all about what works for you. The golden rule? Only invest what you can genuinely afford.
The value of an investment may go down as well as up and you could get back less than invested. Tax benefits are based on personal circumstances and are subject to change.
You might think that investing is for others, perhaps just those wearing pinstripe suits working in the city of London, or on Wall Street in New York, or you need a big lump sum to get going. Today these preconceptions are far from the truth. Millions of people in the UK are investors. You may not appreciate it, but if, for example, you've a workplace pension, you're probably an investor already. In short, being an investor need not be as scary or as alien as it might at first seem.
Starting early can make a big difference, because time is one of your biggest superpowers when it comes to investing. But before you dive in, there are two important steps many should consider.
First, it often makes sense to consider clearing any high-cost debts like credit cards or personal loans.
Two, it often is good practise to make sure you build up a rainy day fund, ideally about three months worth of expenses, potentially in an easy access savings account.
Once that's in place, it's time to think about what you're investing for. Perhaps a home, perhaps retirement, perhaps something else.
Next, consider how you want to contribute. Some people prefer a one-off lump sum, but others like the little and often approach. Even something like £100 a month can really build up over time.
You'll also need to think about how long you want to invest for it, and how much risk you're comfortable with taking. If your goal is short-term, you'll likely want to take less risk, but if you're investing for the long term, you've got more time to ride out the ups and downs.
And finally, do you want to do it yourself, or have your investments managed for you? Some investors like picking their own investments, while others prefer the simplicity of something like a ready-made fund, where your investments are chosen for you.
Here's a little challenge you could try later.
Grab a scrap of paper and ask yourself three questions. What's my monthly income? What are my monthly essentials? And what's left over? Then ask yourself, what's the realistic amount I could invest each month without impacting on my day-to-day? Even if it's a small number, seeing it written down can help make your next steps a lot clearer.
This video is for educational purposes only. This should not be viewed as advice or recommendation to invest. Investing offers the potential for better returns than cash savings over the long term (5+ years).
But there are risks, the value of your investments may go down as well as up, and you may get back less than invested. If you want advice on investment choices, then we’d recommend speaking to a financial adviser. There may be a charge for advice.
This video is part of our wider Each chapter is designed to work alone, so you can jump in wherever you like.
Some investment products need quite a lot of money to start investing in. But with others, you can get started with less than you might think. You can start investing with Aviva from as little as £25 a month, or a one-off payment of £500.
How do you get started investing?
If you want to start investing in stocks and shares, it’s probably easier than you think to get up and running.
If you're sure it's right for you, you can apply for an account online. You can either choose your funds now or later, so if you want to get set up, but take more time to consider your investments, you can.
If you don’t select your funds now your money will be held in the cash account. We retain some of the interest earned on money held in the cash account. Remember, holding money in cash carries the risk that inflation will reduce its spending power over time.
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