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.

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Pay off any debts

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).


Save for emergencies

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.


Learn about risk

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

Important:

The value of your investment can go down as well as up, so you may get back less than you originally invested.

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?

When choosing an investment based on your risk level, you can compare funds using the Key Investor Information Document.

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


Think long term

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

Important:

It’s important to invest for at least 6 years to help ride out any changes in the market. That said, you can take out your money at any time.

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


Plan for 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.


Decide how you want to invest

If you’re comfortable making your own investment choices, you can begin investing now. Use our step-by-step guide to choose a fund and apply online.

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.