If you haven’t yet heard, it’s never too early for you to begin investing, and while many people assume that investing is only for people who already have money (or are really good at math) this is not the truth at all. Everyone can (and should) invest, and the sooner you begin, the sooner you’ll be able to get your finances sorted and reach your goals.
For new investors, it’s common to follow the way your parents have invested. One thing to remember though, is that the way that people invest will change at every stage of their life, so you should probably be carving your own road.
The first thing you need to do is learn about the basics of both saving and investing. Luckily, the internet has thousands of different resources available to help you learn all about investing and personal finance.
Many people assume that they have no money to invest, since when you have low earnings and high outgoings, it’s common to just be focusing on “getting by” and paying your bills each month. Most people under 30 will be deciding whether they’re saving for a pension or property, as it’s unlikely that you’ll have the money to do both, and that’s perfectly fine.
Many of the products on the market are for people aimed at getting on the first step of the property ladder, and these are a popular choice amongst the under-30 crowd. It’s also worth learning about accounts like Stocks & Shares ISA, which are a great option, since the cash you invest can be used for any of your financial goals, potentially giving you a higher rate of return compared to Cash ISAs.
One great option is to choose the investor, which allows you to open an account with just £50, topping up that investment with just £1 whenever you have a few minutes spare. Since the idea of investing can be overwhelming, this is a great way to get started and makes investing obtainable for anyone- regardless of your financial situation.
While it’s easy to be focused on buying a property when you’re in your twenties, it’s crucial that you’re not completely disregarding pension planning, since the earlier you begin, the better you’re likely to be financially in the future. It’s easy to see retirement as years and years away, however if you begin putting even a little bit of money away when you’re young, compound interest can ensure that this turns into a lot of money when it’s time to retire.
While this can seem impossible, it’s a good idea to look at a few different ways that you can begin saving money and putting it towards your retirement- since the percentage necessary is only likely to increase.
Many people will open a Personal Pension or Stocks & Shares ISA along with any investment or savings accounts they have, although they could be investing in a portfolio that’s not the right choice for their circumstances- younger investors should generally choose funds that are more aggressive so they can have better long-term growth and use the longer time to ride out any market dips.