Let’s debunk a few investing myths
You need a lot of money to start investing. No! I started with £20 a month.
You need to understand the stock market and how it all works. Learn as you go.
When you understand how the stock market works, and what to expect, you can ride
the ups and downs as you’re in it for the long term and overtime it always goes up.
You need to time it perfectly to do well. No! Invest whatever you can afford every
month, automate it, continue.
Property is the best investment. There are other ways to build wealth successfully –
the four main asset classes are: cash, shares, bonds and property. It’s wise to spread
your investments across these.
These myths are just that….myths! You can start investing with a small amount, I suggest a percentage of your monthly take-home pay, maybe 1 – 10% to begin with, depending on how much you can afford. You don’t need a fancy financial adviser, you can do it all yourself! And it’s not as complicated as you might think.
BUT……Before you start investing, make sure you can cover the basics. I’ll be posting
practical tips on each of these points.
1) First things first – have an emergency savings pot
This protects you from life’s unexpected curveballs. Aim for 3 – 6 months of expenses.
If you’re starting from scratch, start saving to cover one month’s expenses, and then
save to cover two, then three, then six. What’s this for? A home or car repair, losing
your job etc.
2) Clear any high-interest debt
Clear or get under control any short-term loans, overdrafts, credit and store cards.
3) Understand your goals
Know what you’re investing for and when you might need the money back
4) What’s your timeframe?
You need a runway of at least 8 years investing time where you leave your money along
to grow.
5) Understand the best way to invest
Make the most of tax perks and invest through ISAs, pensions, diversified funds.
6) Be prepared to leave this money well alone
Make sure you only invest money you can afford to leave invested so you can ride the
ups and downs of the stock market. Remember, the stock market always goes up…but
everyone will experience a bumpy journey along the way. Be prepared to leave it alone
– ‘set it and forget it!’
Think about your emergency pot, what do you have saved and is it enough? If not,
what’s a realistic monthly amount you could transfer automatically to grow your pot
over time?