9 steps to investing

There are key considerations when it comes to investing. The money you have saved has potential to be spread amongst a range of investments options, but it's worthwhile taking the time to research each carefully before committing any savings.

1. Work out what you can afford to invest

Researching the options available along with the risks and charges for different types of investments is a good starting point, before you part with your hard-earned cash.  Don’t invest money that you will need soon or you can’t afford to lose.

2. Think about regular savings

Do you want to put away money on a regular basis, say monthly, or save lump sums as and when you can afford to? Have a think about your lifestyle or circumstances and whether this is going to remain stable or likely to change.

Is it important to try to grow your money, receive an income or both?.

3. Determine your goals

How long do you want to invest for? What's your target? Is it important to try to grow your money, receive an income or both? It's worth remembering that receiving an income may reduce the value of your investment. Do you want to be able to withdraw money, or would you like it to be tied up for a period of time? Should you be thinking about a pension as well as investments?       

Remember, the value of any investment and the income from them can go down as well as up and you may not get back all of the amount you put in.

4. Consider the risks

We're all different.  Some people choose more adventurous investments with bigger growth potential, whilst others want safe havens to protect their money, especially as they approach retirement.

It's always good to think about how you would approach the risks associated with investing.  Adventurous investments may often carry bigger risks compared to those of more cautious investments.  It's a fine balancing act of weighing up higher growth potential with higher-risk, or less growth with less risk.

Remember, the value of any investment and the income from them can go down as well as up and you may not get back the amount you put in.

5. Limit the risks

Each type of investment can carry different risks and you should consider these before making any decisions. Think about spreading your money across different kinds of investments to help limit potential losses.  This is called diversification. 

6. Know your funds

Investment funds can be 'actively managed', where managers make decisions about where to invest the money; or 'passive', where the fund is set up to track the performance of a share index (normally called a tracker fund). All funds have charges, so make sure you are getting value for money.

7. Do your homework

Check the financial press and financial websites for information about the investments you are interested in. Make sure you're happy with the fund manager's approach and where your money will be invested. It's also a good idea to double check the risk-rating of investments (eg, adventurous / cautious) to make sure you're investing at a level you are comfortable with.

8. Check the fees

Ensure you understand any charges and/or tax you may have to pay on a monthly or yearly basis or when it comes to taking your money out of your investment.  Also, if you're investing through a financial adviser, it’s worth finding out how much you'll be charged for advice.

9. Keep an eye on your investments

Keep watch of how your investments are performing to make sure you're still happy with your choices and not at risk of losing your money. You can usually switch between funds, but some companies may charge for this.   You might also like to talk to your financial adviser.

We are not recommending one option over another or providing advice.

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