How to get started with investing

If you’ve always had a bit of a mental block when it comes to investing, you’re not alone. Only a quarter of women are investors, compared to four in 10 men, and while women hold more ISAs than men, they tend to be cash ones not stocks & share ISAs. What’s more, new research from Wealthify shows that nearly three quarters of women don’t feel confident investing their money, compared to 58% of men. The underlying factors include a fear of losing money (86% of respondents), a fear of getting scammed (75%) and not knowing where to start (74%).

So, where do you start? If you have a pension, you’ve actually already made the first step. The contributions you make are already being invested for you to provide an income when you stop working. But if you can also put away a regular amount from your salary (or a lump sum), and leave it untouched it for a minimum of five years – preferably longer – it’s worth looking at investing. The gains from investing can be bigger than saving, but the value of investments can go down as well as up which is why it’s important to take the long view.

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Now to tackle those investment fears holding you back:

#1 Not enough money

“The number one blocker to investing is lack of money – women across all age groups state that if they only had more, they would take the plunge,” says Emma Wall, head of investment analysis and research at Hargreaves Lansdown.“Women are failing to invest as much as our male counterparts so risk creating a permanent gap in their financial health and wealth.” And there’s the rub: you may be waiting to reach that oasis in your adult life when there is ‘enough’ time/energy/money to take a look at investing. But the problem is that the longer these daily obstacles get in the way of focusing on supercharging the growth of your money, the less time your money has to make greater returns when you do get around to investing it.

“We need to be aware of any detrimental factors that could impact our longer-term financial security, such as career breaks, maternity, divorce, finishing early or reducing hours due to menopause or looking after elderly parents,” says Carla Brown, chartered financial adviser and MD of Oakmere Wealth.

So we need to bust the ‘not enough money’ myth straightaway. “You don’t need a lot of money in the bank to be able to invest; it can be little and often,” says Hannah Irvin, financial adviser at True Potential Wealth Management. “Perhaps focus on any disposable income left over at the end of the month or set a fixed monthly amount and treat it like a utility bill. Whichever works best for you, it’s regular contributions like these that can help enhance your long-term financial future.”

#2 Fear of losing money

There are three sides to this barrier – the inherently risky nature of the stock market, trusting others with your money (when you may not fully understand the mechanics of the stock market yourself) and worries about getting scammed. Let’s look at each in turn.

Are you a risk taker?

A third of women say their fear of risk is one of the most significant barriers to them either starting to invest or contributing further sums to their portfolio, according to Fidelity International.

“Depending on your financial situation, and your age and reason for investing, you might feel prepared to put up with higher risk for the potential of greater returns. Or if you’re wanting safer, steadier returns then a lower risk attitude might be more suitable for your needs,” says Emma-Lou Montgomery, associate director for personal Investing at Fidelity International.

To help you get a better idea of your ‘risk profile’ and the kind of investment you’d feel comfortable with, check out the FCA’s InvestSmart from the FCA.

Do you have trust issues?

This is a perfectly rational starting point: don’t put your money into anything you don’t understand. The majority of women who took part in the Wealthify survey say they would be more likely to invest if they were more knowledgeable about it. One in three women stated that they don’t feel confident investing because of the lack of education on investments in school or growing up.

Educating yourself about investing, and reducing the fear factor, will put you in a better place to make decisions about who you trust with your money and what you invest in. Emilie Bellet, the founder and CEO of Vestpod, says: “Investing plays a vital role in achieving financial independence and fulfilling our long-term goals. It’s not just about beating inflation and benefiting from compound growth; it’s about making our money work as hard as it can for us.”

“Take the time to learn about different investment options and understand the basics,” says Carla Brown. “Read books, articles, or attend seminars/webinars to gain knowledge about stocks, bonds, funds and other investment vehicles. This knowledge will empower you to make informed investment decisions.”

*FCA InvestSmart and MoneyHelper are both great sources of general information about how investing works.

*Investment companies themselves, of course, have a wealth of information on their websites, including Hargreaves Landsown, Wealthify and Fidelity.

*If you expert guidance, a financial advisor can help you make a plan to hit your investment goals and recommend the right mix of investments based on your circumstances and the level of risk you’re willing to take.

*Check the adviser is FCA regulated and look for someone who understands your life. Use Unbiased and Vouchedfor to find regulated IFAs in your area.

*Check out Vestpod events and podcasts, Hargreaves Lansdown’s Financially Fearless website and free online events. Also, get tips on starting out in investing from Ola @allthingsmoney and listen to Claer Barrett, the FT’s consumer editor, on the Money Clinic podcast.

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Protect yourself from financial crime

We all know someone who has been impacted by a scam or we may have received a phishing email or call ourselves. The good news for would-be investors is that there is robust regulation around financial institutions. “The large platforms are regulated by the FCA and are required to dedicate time, money and people to protecting your money,” says Emma Wall. “Never share or store your password somewhere it can be accessed by others, and never give out your full details over the phone or online – we will only ever ask for part of your password or security number.

“Finally, a bank, building society or investment platform will never cold call you. It is good practice if being contacted by a financial institution to hang up and call them back on the registered phone number,” says Emma.

The FCA keeps a warning list of unauthorized firms and individuals updated – check it here.

*Be careful getting investment advice of social media!

According to Shepherds Friendly, more than 25% of Gen Zs surveyed said they were getting their financial advice from TikTok. And the FCA’s own research into how young adults interact with investment via social media shows that only 2% of young investors plan to have the money invested for five years or longer.

“Social media has a lot to answer for, with many people getting into investing for the first time because they hear about people making loads of money almost overnight,” says Laura Suter, head of personal finance at AJ Bell. “At best these are exaggerations and at worst they are scams. Lots of young people also use the likes of TikTok and Instagram to research investments, which can be a recipe for disaster. It means people will end up investing in far too risky assets or getting lured into scams and losing all their money,” she says.

You can check the FCA’s financial services register to find warnings about current scams, and use its scam investment checker tool.

#3 I’ll stick to savings rather than investing

Of course, the first two rules of good finances are to have a healthy rainy-day fund (3-6 months’ worth of salary) that’s easily accessible and keep debt under control. These should be the first priority before considering investing. But after that, it shouldn’t be a savings v investing, either/or situation, says Myron Jobson, senior personal finance analyst, interactive investor: “The answer is you should be doing both if you have the means to do so – whatever your goals and attitude to risk.”

“It is unhelpful to view savings rates and investment returns in the same way because it creates an expectation of having a steady annual return when the reality is you could see a double-digit return in one year and a loss the next. The key is to give your money ample time in the market to smooth out the effects of weekly market ups and downs. And don’t forget that cash rates fluctuate too – there’s no telling if a good rate now will still be there in the future,” says Myron.

Obviously, past performance is no guarantee of future performance but we asked Hargreaves Lansdown what the return on £10k would have been if invested in the stock market over the past ten years compared to saving it on the high street. They told us that £10 invested in a global tracker fund over the past 10 years would have grown in value to £19,033. The same money in an NS&I income bond would now be worth £11,118.14.

Five simple tips to get you started

  • Set Financial Goals “Determine what you want to achieve through investing, whether it’s saving for retirement, buying a house, or funding a child’s education. Having clear goals will guide your investment strategy,” says Carla Brown.
  • “Take 10-20 minutes a week, each week, to educate yourself. Lean into online resources from trusted sources, find a community you feel comfortable with, ask them questions and just start doing!” says Emilie Bellet.
  • “Set up a regular saving scheme from as little as £25 a month. This is paid via direct debit so once set up needs no extra effort,” says Emma Wall, “Starting to invest is easier than you think.”
  • Investment platform comparison websites are a great place to start if you aren’t sure what you’re after. “I find robo-advisers really helpful for beginners as they offer ready-made portfolios, which means your money will be invested immediately in a diversified way. Once and if you’re ready to customise your portfolio, you can choose to DIY, ” says Emilie Bellet.
  • Focus on your pension “If you’re investing for the long term – to pay for your retirement adventures – and you’re employed, often the most sensible course is to simply max out your workplace pension contributions. It is literally free money – as you get top-ups from your employer and the Government,” says Emma.

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