If you’re a beginner just getting started with your investing journey, please do not get your tips or advice from places like TikTok.
Over the last year, loads of people have become more interested in finance and investing. Which is awesome!
However, it’s opened the floodgates for lots of shoddy commentary and pointers from idiots.
So I’ve put together this brief investing guide for beginners to try and push back against the tidal wave of poop breaking and crashing all over the internet. Here we go!
What are some investing tips for beginners?
Here are five straightforward tips to help you get started with your investing journey:
1. Use a cheap account
Using an account that is free to set up and with low fees is going to help you immensely in the long-run.
Firstly, you might make some mistakes in the beginning. Which is okay, everyone does it. But by using a cheap platform, you’re not going to get stung with high fees or trading charges every time you make a move.
Secondly, the low fees are going to help your portfolio grow with compound interest. Every little nasty added percentage or pound charge is going to really add up over time. By paying less fees, you will give your account the best chance of growing to its full potential.
Depending on how you want to invest, two good places to start are:
- Vanguard - My favourite place for investing in funds. It’s free to set up an account, they have extremely low fees, and you can cancel and leave with no hidden charges.
- Freetrade - This is a great place if you want to concentrate more on individual stocks and shares or things like investment trusts.
Here are some other investing apps for beginners, include some robs-advisers who just do everything for you if you want minimal involvement.
2. Use a stocks and shares ISA
If you’re based in the UK then this should absolutely be the account you use for your investments.
You can put up to £20,000 per year into one of these and any growth will be free from things like capital gains tax.
This means that you could potentially use this type of account for all of your investing and you may never pay any tax whatsoever on your investments. Which makes this the best type of account for beginners or experts!
It’s worth pointing out that with the companies mentioned in tip one - Vanguard offer a free stocks and shares ISA but Freetrade charge a few quid each month.
3. Choose your investments carefully
If you’re really stuck with getting started, here are 3 top index funds.
Investing as a beginner can feel overwhelming, so don’t be afraid to get help or seek some support.
Although this tip means doing some due diligence, don’t overthink things too much and get scared. Just start small and take your time. You can dip into things bit by bit rather than taking one massive plunge.
If you’re first investments aren’t great, don’t beat yourself up. Dust yourself off and try and find how you can learn or improve your strategy.
4. Set up automatic payments
Unless the amount you’re investing is constantly changing, using automated payments is a fantastic tip for beginners.
Doing this will take out some of the mental legwork and make it easier for you to build a solid habit of making investments on a regular basis.
Ideally, use something like a direct debit to take out the amount you want to invest the same day as you get paid. This will help keep you on track, make sure you don’t spend the money, and mean that you don’t ever get a chance to ‘miss’ that money.
5. Keep your cool
“Where’s your head at? Where’s your head at? (where your head at)” - Basement Jaxx
Wise words. When you start investing, it can be easy to let all the constant market news consume your whole brain.
A great investing tip for beginners is to make sure you take a step back and don’t stay over involved with your investments.
Keep an eye on the markets but most things happening today are probably going to make little impact to your investments in ten years or longer.
It can be really stressful to keep checking your portfolio every day. It will invite unnecessary grief into your life, like a financial hangover. Just stay on track and keep to your path and try to have a long-term outlook on things.
Investing for beginners in the UK
I hope these investing tips will give you some direction. There’s a lot of financial turd out there right now so be careful. If you want some more details, I created a free investment guide eBook which you download on this site.
Remember that the value of investments can go up or down, especially in the short term. Individual tax will also depend on your specific circumstances and could change.
Keep it simple, keep it classy.