Money Goals

5 top tips for getting started with investing

Jun 1, 2023

Are you looking to dip your toes into the world of stocks and investments? It can be very exciting and help you to grow your wealth and reach your financial goals. But investing for beginners can be overwhelming, as it comes with so many options and risks. Don’t panic! Loqbox has five top investment tips for beginners in the UK. 

Investing for beginners

Let’s start with the basics. What is investing? In simple terms it’s about making your money work for you. When you invest, you spend your money on something and gamble that its value will increase over time. If you keep your money in a savings account you could receive some modest interest payments on it, but investing has the potential to bring much greater returns.

Investing is not only about stocks and shares

A common investment is in property. House prices have seen significant growth since the early 2000s. The downside is that buying a house is expensive and there’s no absolute guarantee that you’ll see the value increase. However, you can often increase the value with some renovation work, or earn some side money by letting out a room. 

Keep in mind though that while your property might be worth more than what you paid for it, the same could go for the house that you’ll want to move into.

As well as property, there are lots of types of investments you can make from stocks and shares to vintage toys and fine wines! With rare or collectible products you’d ideally have a level of expertise to understand where the best value is. But with stocks and shares, you can often get involved with far less commitment.

How much money do you need to start investing?

There is a common misconception that you need to be wealthy to start investing.But the truth is that you can start with much smaller sums. In fact, keeping your initial investments small reduces the risk of losing big when you start out. As a general rule you never want to invest more than you can afford to lose.

Investing has risks

Investing has amazing potential for wealth growth. But it also comes with a great deal of risk. Before you start thinking about investing, it’s important to know that you could lose your money or end up with less than you started with. However, Loqbox looks at some of the things you can do to protect yourself when you get started with investing.

There isn’t a get rich quick guarantee when it comes to investing (in fact, investing tends to be a long game). Loqbox wouldn’t recommend investing until after:

  • You’ve paid off any high interest debts
  • You have an emergency fund in place (three to six months of your monthly outgoings)
  • You have savings for goals to achieve in the next 5-10 years (pulling money out of your investments too soon means you likely wouldn’t see the maximum benefit in your returns)

5 tips for how to start investing

1. Get in the know

Before diving into investing, respect the risks and take the time to get to know the basics. Find out about different investment options like stocks, bonds, mutual funds, and exchange traded-funds (ETFs). Learn about concepts like risk, diversification, and compounding. There are plenty of online resources, books, and courses to help you figure out the best investment for you.

Also, find an investment platform that works best for you and your needs. There are a lot of platforms that you can run from your phone. Some will offer commission free trading, or be the best for a specific investment type, while others may be more useful in helping beginners learn the ropes and practice risk-free.

2. Set clear goals

Set your investment goals early in the process. Are you investing for your retirement, to grow your wealth in the long term, or to set up generational wealth to pass down to your family? Setting clear objectives will help when you make investment decisions in the future. Targets help you to build investment strategies, choose platforms, and stay focused when your investments fluctuate.

3. Assets versus liabilities

Assets make you money, liabilities lose value. Both are important when it comes to building your investment portfolio, whether it’s stocks and shares or physical products that you want to invest in.

Things like cars are often seen as a liability because they cost you money to run and their value decreases as the mileage goes up. However, something like a designer handbag could see its price increase year on year (keep them in pristine condition with authenticity cards and proof of purchase if this is an avenue you want to go down).   

4. Start small and be consistent

You don't need a large sum of money to start investing. It’s more important to begin with an amount you're comfortable with and consistently contribute to your investment portfolio. Many platforms offer automated investing features, letting you set up recurring deposits, which make it easier to stay disciplined and build your investments over time.

5. Diversify your portfolio

One of the best things you can do when you’re investing is spread your investments across different types, industries, and countries. This way you’re not putting all your eggs in one basket and gives you a better opportunity for growth. Consider investing in a mix of stocks, bonds, and other assets that stay within your affordability and aimed at your goals.

So, how do I start investing?

Remember, investing is a long-term game. Stay patient, keep learning, and adapt your strategy as needed. It can take as long as five to ten years to see a sizable return on your investments. Make sure to seek out professional financial advice where possible and above all, keep your goals and targets in mind. They will help you avoid making mistakes!

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