When to invest

Do you have some money left over every month? If you’ve covered your living expenses and have savings for emergencies, it might be time to think about investing. You don’t need a lot to get started but there are a few things to consider first.

Are you currently paying off any unsecured debts, like loans, overdrafts, store cards or credit cards?

The return on investments can’t reliably be more than the interest you pay on high-interest debts, so by investing you could end up in worse shape than before.

Before investing, it makes sense to have paid off any debts (excluding a mortgage).

Do you have enough savings to cover unexpected costs, like car repairs or replacing a washing machine?

Without enough savings, unexpected costs could lead to overdraft fees and interest on loans or credit cards. These could be more than you’d make from your investments, so you may end up worse off.

It’s best to hold off investing until you’ve enough money to cover emergencies. Many people aim to have 3 times their monthly outgoings somewhere they can get to it easily.

All investments involve some financial risk. Before investing, make sure you are comfortable with the risks of each investment you plan to make.

The risk-return scale ranges from 1 to 7, with 1 being the lowest risk and 7 being the highest.

If the fund is higher risk, there’s a greater chance you’ll lose some or all of the money you originally invested. There is also a greater chance of reward. Funds that are higher risk, generally invest a high proportion in shares.

Lower risk funds are more stable, with a lower risk of loss but also a lower chance of growth. Low risk funds have a higher proportion of assets invested in cash and bonds.

To help understand your attitude to investment risk, ask yourself:

• How comfortable are you with the fact investments rise and fall in value?
• What would be the immediate and long-term impact of your investments losing value?
• How would you feel if you didn't reach your investment goals?

If you’re not sure about your attitude to risk, our financial advisers can help.

Every investment market has its ups and downs. Are you happy to commit for the long term?

The longer you can keep your money invested, the lower the risk that you’ll potentially make a loss.

What would happen if you lost money by investing?

With any investment, there’s a risk that you could lose some or all of the money you invested, as well as any growth or income generated.

It’s important to think about what this could mean to you. All losses, small or large, will impact your financial wellbeing.

If you’re not sure which investments are right for you, our expert Financial Advisers can help.

We’ll talk through your circumstances and goals, then give you a personalised investment recommendation based on what you’ve told us. This service has an additional cost, which we’ll outline beforehand.