Is investing right for me?

It makes sense to have paid off your debts and start saving sensibly before you consider investing. If you have debts (other than a mortgage), consider paying them off before you start investing.

The return on Investments can’t reliably be more than the interest you pay on debts, so by investing you could end up in worse shape than before. See our guide to Managing debt

It’s best if you hold off investing until you’ve enough money to cover emergencies.

Without enough cash savings, emergency expenses, such as replacing a broken washing machine or repairing your car, could lead to overdraft fees and interest on loans or credit cards. These costs could be more than you’d make from your investments.

An Individual Savings Account (ISA) is a tax efficient way to save or invest. You have to be a UK resident and aged 16 or over to have a cash ISA or 18 or over to invest in a stocks and shares ISA or a combination of both.

A stocks and shares ISA gives you a tax efficient way to invest, offering greater potential for growth but there is also a risk that your investment could fall in value.

• Your £20,000 allowance is for the whole tax year – 6 April 2019 until 5 April 2020.
• £20,000 is your total ISA allowance. It’s up to you to choose how you split your allowance between a cash ISA and stocks and shares ISA.

All investments involve some risk. Before investing, you should understand and be comfortable with the risks of each investment you plan to make.

As a rule of thumb, the more risk you take on, the higher the potential return. But there’s also a greater chance that you’ll lose some or all of the money originally invested. When thinking about how much risk you’re willing to take, keep some things in mind:

• your current financial situation
• how much you know about investing and how comfortable you are with it
• whether your financial goals call for taking on more risk

Every investment market has its ups and downs. The longer you can keep your money invested, the lower the risk that you’ll potentially make a loss. You should consider only investing money that you can afford to set aside for the next 6 to 10 years.

With any investment, there’s a risk that you can lose some or all of the original amount you invested in addition to any growth or income that you may receive from your investment. It’s important to think about what this could mean to you. All losses – small or large – will impact your financial wellbeing.