Five tips for first-time investors

Investing for the first time can be daunting, but for those who are in it for the long-term, it could help you achieve your goals more quickly.

In a period of all time low interest rates, finding ways to make your money work harder is especially important. Money inside a cash savings account could be eroded by inflation and lose its real value over time. Although the stock market goes down as well as up, history shows that, over time, equities tend to perform more strongly than cash and grow ahead of inflation.

Here are some tips for first-time investors to help you get started.

1. Know your objectives

Setting objectives will give you something concrete to work towards. You will need a relatively long-term aim to give your investments the time to ride out any market volatility. Perhaps you wish to save towards retirement, for example, or your children’s future. During short-term market falls, focusing on your goals will also help you to avoid selling out and crystallising losses.

2. Set up regular investments

You don’t need a large sum to start investing. In fact, drip-feeding what you can afford each month to build a lump sum, could be beneficial during times of stock market turmoil and economic uncertainty.

Your money buys more shares at a cheaper price when the market falls, and fewer shares at a higher price when the market rises. This averages out the price at which you buy investments and, over time, could help to smooth market volatility.

3. Use your tax allowances

Remember your Individual Savings Account (ISA) allowance. This amounts to £20,000 for the 2021/22 tax year. Investments inside an ISA grow free of capital gains tax. Put simply, ISAs are virtually tax free, which could help you to build a substantial investment pot over time. But please bear in mind, the ISA allowance is a “use it or lose it” allowance, i.e., if you don’t use it in one tax year you can’t carry it forward.

4. Manage your emotions

Letting your emotions dictate your investment decisions isn’t the sensible route to returns. It’s understandable to experience some jitters if the stock market falls, particularly as a first-time investor. Try to hold your nerve, and once you’ve dipped your toe into the market, stay there i.e., a “buy and hold” approach.

5. Diversify

It’s wise to choose a spread of investments – including equities, bonds, cash, and property – because different assets behave in different ways. This could help to even out returns and reduce the impact of any particular asset falling in value.

For beginner investors, this can be a daunting task – and that’s where a professional financial adviser comes in. An adviser will help you spread your money across a diverse range of investments in a way that suits your personal needs and risk profile. They will also ensure you’re taking advantage of all your tax allowances, reliefs, and exemptions, so that you can feel confident your money is working as hard as it should be.

How Grosvenor Wealth Management support you?

Our investment advice is central to providing sustainable Wealth Management and forms an integral part of your Life Plan. Our view is that the best performance is one which gives you the right outcome. Our investment expertise focuses on delivering a high degree of predictability and ultimately value in return for risk.

Depending on your needs and preferences, we can construct an investment portfolio for you using a wide range of investment solutions and either make investment decisions on your behalf or simply make recommendations. The choice is entirely yours.

We will monitor the performance and volatility of your portfolio. Our aim is always to balance any downside risk with the necessary investment return to fuel your Life Plan. If you would like to find out more about how we can support your investment strategy, please get in touch. Our team of independent financial advisers are ready to help. We look forward to welcoming you to Grosvenor Wealth Management.

The value of investments can fall and you may get back less than you invested. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Neither simulated nor actual past performance are reliable indicators of future performance. Information is provided only as an example and is not a recommendation to pursue a particular strategy. Opinions expressed in this publication are not necessarily the views held throughout Grosvenor Wealth Management Ltd.