With the emergence of online investment platforms like Interactive Investor, investing is no longer the domain of financial advisors or people with the time and expertise to spend hours studying the market. Now investing has opened its doors to the masses and anyone can jump in with the hopes of increasing their wealth on the stock market.
If you are one of the thousands of people who are now considering taking the leap into investing then here are some simple surefire tips to get you started along the right track.
The first thing to remember is that there are no guarantees that you will make money on the stock market, and you can in fact get back less than what you originally invested. Therefore, you should never invest more than you can afford to lose. It is recommended that you have enough savings to sustain your lifestyle for three to six months before you consider any investments. You should also be comfortable with having your investment cash locked away for a minimum of five years. Investing is considered a long term activity in order to give you time to ride out any volatility in the market. If you think you will need to access your cash sooner, then a savings account may be a better option for you.
Choosing how you wish to invest is another consideration. Some investors prefer to deposit a lump sum whilst others take a more cautious approach and drip feed money into their investment account via direct debit. Should the latter option be more appealing to you, then you will need a vehicle that can facilitate a direct debit. Most online platforms will now offer this service.
The next major consideration should be what type of investment is most appealing to your circumstance. There are plenty of options which can seem overwhelming to new investors, however, in order to remain diversified and therefore reduce your risk, it is advisable to pick a fund or ready-made portfolio as these will be actively managed by a professional for a small fee.