The value of your investments can go down as well as up and you may get back less than you paid in. Laws and tax rules may change in the future. Your own circumstances and where you live in the UK also have an impact on tax treatment.
1. Work out what your goals are
Different types of investments can be appropriate for different saving goals. Do your research and make sure what you’re investing in is right for you and your needs.
2. Know how much you can afford to invest
Before you start investing, make sure you have enough to cover all your day-to-day spending and bills. It’s ok to start small and build up your investments over time – investing is a marathon, not a sprint.
3. Assess your attitude to risk
All investments carry some kind of risk, although it's risk with the aim of growing the value of your money. So it isn't a bad thing. It's just important you consider how much risk you're willing and able to take when you invest. This is different for everyone and could change as you move through life. We have a quick questionnaire to help you work out how much risk you're comfortable with.
4. Help reduce risk by diversifying your investments
This simply means that if you spread your money across a mix of investment types (asset classes) and countries, you’re less likely to see the value of your investments change dramatically. That’s because different investments tend to behave in different ways – what causes one to fall can often cause another to rise.
You can learn more about diversification by reading our guide.
5. Decide if you're comfortable picking your own investments
You can pick and manage your own investments, but many people choose an option that lets a team of investment professionals do the hard work for them. They’re there to make your life easier, but if you’re happy to take a DIY approach, just make sure you understand the risks involved with the investments you’re choosing.
6. Think long term
Generally, investing pays off best when you’re in it for the long haul (at least five years) because your money has more time to potentially grow. Markets can fall as well as rise in the short term and it can be tempting to sell some of your investments when they do. But it’s not always a good idea. Historically, over longer time periods (usually more than 10 years), markets have gone up in value. So, generally, people who’ve kept their money invested and ridden out short-term falls are likely to have seen the value increase. Remember though that past performance isn’t a reliable guide to future performance.
7. Review, review, review
Make sure you’re regularly keeping track of your investments so you know they’re still doing what you’d expect them to. Remember, market movements are normal and shouldn’t affect your investments too much in the long term so take care not to fall into the short-term trap – see 6. Think long term.
If you’re already investing with us, you can log in to check your investments.