Are you wondering how to start investing? We explain how to take your first steps in investment…

A recent survey* has shown that for many, building up their savings is not top of their agenda.

Everyone should start putting some money aside for emergencies, and for the bigger things in life like the deposit on a home, a child’s education or a wedding.

For most of us, having some cash that we can access quickly to pay for unexpected things like an unforeseen bill, and some that steadily builds up over the years, makes good financial sense.

An ISA is a simple, tax-free way to save or invest for the future. The advantage of these types of account is that you don’t pay tax on the interest or dividends you earn, or the increase in the value of your investments.
There are now several different types of ISA available, designed by the government to encourage everyone to save or invest for their future.

The basic types are:

  • Cash ISAs and Stocks and Shares ISAs for savers and investors
  • Junior ISAs for children
  • Help to Buy ISAs for those saving for their first home
  • Lifetime ISAs for those saving to buy their first home or who wish to save until age 60.

(*PiggyBank, 2018)

TAKE YOUR FIRST STEPS IN INVESTMENT

When learning how to start investing, you’ll find out that investment means introducing your money to risk. Although this also offers the prospect of getting better returns than are available on savings accounts. Fledgling investors often begin by drip-feeding smaller amounts of money into ISAs, collective investments such as unit trusts, managed funds or bonds, rather than risking a lump sum at what could turn out to be a bad time.

If you put your money into stock market investments, you should be prepared to do so for at least five years and preferably longer. You’ll also need to think about your attitude to risk, as this will have a bearing on the type of investments that will be right for you.

If you invest in the stock market, your capital will rise and fall according to how the economy and markets here and globally are performing, meaning that you need to be able to cope with peaks and troughs.
Whether you’re saving or investing to help your children, want to retire early, or simply build your lifetime wealth, good advice can ensure that you make the most of your money and avoid the pitfalls.

LUMP SUM OR REGULAR SAVINGS?

The good news is that since 6th April you can use this year’s ISA savings allowance to put your hard-earned cash to work in a tax-efficient way. The 2018–19 allowance is a generous £20,000, and it makes sense to take advantage of this savings opportunity as soon as possible in the year, rather than risk losing your entitlement if you forget and miss the tax yearend deadline.

The longer your money is in your ISA, the more opportunity for interest and growth.

If you’re planning to use your ISA allowance this tax year, it’s worth remembering that the longer your money is saved or invested, the more time it has to produce tax-free returns.

If you’re thinking of putting your ISA subscription into the stock market but are worried about volatility that stocks and shares experience, then you can always choose to make regular contributions.

This approach is called ‘pound-cost averaging’ and means that you don’t have to worry about getting the timing of purchases exactly right, and there’s no need to constantly watch markets to invest at the right moment.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

For more information on how to start investing or other financial advice, please do get in touch with our investment advisor. Clifford Osborne are Independent Financial Advisors (IFA) based in Eastbourne, East Sussex, offering ISA transfer advice, pension planning advicemortgage advice and moreYou can read our VoucherFor reviews here. Our clients often come from Uckfield, Lewes, Brighton, Tunbridge Wells, Hastings, Bexhill, Newhaven, Seaford, Crowborough and further afield.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

It is important to take professional advice before making any decision relating to your personal finances. Information within this blog is based on our current understanding of taxation and can be subject to change in future.

It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.

The information contained within the blog is for information purposes only and does not constitute financial advice.

The purpose of the blog is to provide technical and general guidance and should not be interpreted as a personal recommendation or advice.