Investing for beginners: busting myths with Wealthify

by | Nov 24, 2020 | Articles, Saving

Sponsored and written by Wealthify

With interest rates at historic lows, your savings may not have the opportunity to grow as much as they could. With this in mind, now could be a great time to consider other options to make your money work harder. One thing you could do is to consider investing. It may sound a little scary, but investing could give your money the interest it deserves.
There are still many misconceptions about investing, so we’re here to debunk some common myths to help you get started. 

Myth 1: ‘I don’t have enough money’

It’s often assumed that you need to be super rich, or at least ‘well-off’, to start investing. Whilst that may have been true in the past, when you needed thousands to take the plunge, thankfully it’s no longer the case today. With digital investment platforms (sometimes known as ‘robo-investors’) everything is done online and it’s possible to invest from just £1. You also have the option to invest little and often, meaning you can get started with small sums invested regularly whilst you build your confidence.

Myth 2: ‘It’s too complicated’

Many people think they don’t have enough experience or knowledge to start investing. But the truth is that you don’t need to be a financial wizard to give investing a try. Again, with robo-investors, you get investment experts, who know all the complicated stuff to do the hard work for you. This means you can sit back and spend more time doing what you love instead of trying to decode the investment jargon – who’s got time for that anyway?

Myth 3: ‘It’s too risky’

Since returns aren’t guaranteed, investing does involve an element of risk – you could, for example, end up with less than you initially put in. However, risk is a much-misunderstood thing as it can be managed. In fact, there are many things you can do to mitigate investment risk. For instance, investing in lots of things from different places could help spread your risk and reduce the likelihood of losing money. Similarly, remaining invested over the long-term could help you ride out market bumps and it would give your money more time to potentially flourish.

And with digital investment platforms, it’s even easier to mitigate risk as most providers come equipped with slick tools that allow you to choose a risk level that suits you. If you’re the cautious type, then you have the option to set your plan on the lower side of the risk spectrum, meaning you will hold low-risk investments, such as government bonds. If you’re the adventurous type however, then your money will be invested in investments seen as riskier, such as shares.

Myth 4: ‘I’m too young to invest’

No, you’re not! It’s never too early to invest – in fact, the younger, the better as you could benefit from something called ‘compounding’. This may sound a bit jargon-y but the concept is very easy to understand. When you invest in companies, you can get payments, known as dividends, and when re-invested, these gains can start generating further profits, providing the environment is favourable. Over a number of years, thanks to the power of compounding, your money could snowball and the earlier you start putting money aside, the more potential you’re giving to your nest egg.

Myth 5: ‘It’s just not for me’

Investing is often associated with men in expensive suits looking at a myriad of numbers on multiple screens, but thanks to digital platforms, investing has become accessible to anyone. Nowadays, everybody can become an investor in just a few clicks. With robo-investment platforms, you simply need to download an app and choose the type of plan you prefer, such as a Stocks and Shares ISA or a personal pension. Then simply decide how much you want to invest and select the risk level you’re most comfortable with – and you’re done!

The digital age we live in has truly opened up the investment arena to the masses, which includes you. So, next time you’ve got imposter syndrome, remember that there are apps and services out there which make it easy and affordable for you to make your money work harder.

The tax treatment depends on your individual circumstances and may be subject to change in the future.

Please remember the value of your investments can go down as well as up, and you could get back less than invested.

If you’re ready to start investing now, head to Wealthify to start from as little as £1.