New to investing? Here are some tips to get you started

For beginners, the world of investing can look like a daunting place – from deciding which funds to pick to making sense of the jargon.

But it’s important to remember that even the most experienced investor was once sitting where you are now. At its simplest, investing is about two things: protecting and enhancing your wealth.

To help get you started on your investing journey, watch our video series or read on for some simple tips you might want to consider.

1. Think about your investment goal and time horizon

Most people save and invest to achieve a certain goal. The goal could be anything from buying your first home to travelling in retirement or just saving for the future. Knowing what that goal is and when you want to achieve it is a good starting point in developing your investment strategy.

By selecting a goal, you’ll know how long you have until you’ll need to use your investment pot. Knowing your time horizon helps you to work out what types of investments to choose.

2. Review how much risk you want to take

We’ve all heard the phrase ‘stock markets can go down as well as up’, particularly in the short-term. We’ve seen this in action in recent years, whether it’s the market turmoil during the Covid-19 pandemic or small wobbles around elections or changes of government.

Having determined your time horizon, a sensible next step is to consider the level of risk you are willing to take to achieve your goal. Historically, those who have invested in stocks and shares have generally been rewarded over the long term versus leaving their money in cash. But if you’re investing, you have to be prepared for some ups and downs in markets.

Understanding your attitude to risk is an important step in any investors journey. To better understand yours, read our article on investment risk.

3. Consider the role of cash in your investment strategy

Even if your investment time horizon stretches out for decades (often the case for those saving for retirement), it's still important to build a cash buffer you can use if things go wrong.

Having a decent chunk of money readily available in an easy-access account could be a vital part of a sound financial plan. You should consider holding at least three months’ expenses in a rainy-day fund. Make sure you shop around for the best interest savings rate available. Take the fuss out of finding the best rates and browse the competitive rates in our Cash savings hub.

4. Investing small and often can help smooth out the bumps

Once you’ve decided on your investments based on your time horizon and attitude to risk, you’ll need to think about how often you want to invest.

A good way to get into the habit is to consider investing relatively small amounts at regular intervals, usually monthly. This also has the added benefit of smoothing out your investment returns during periods of severe market volatility.

We want to make regular investing as easy as possible. That's why we created our regular investment service, which is easy to set up once you've opened an account. It lets you invest monthly with as little as £25, and comes with a discounted dealing charge of £1.50. Learn more about what regular investing involves.

5. Keep your costs as low as possible

One of the best ways to maximise your investment returns over the long-term is to keep your costs as low as you possibly can. While differences in costs may appear small in percentage terms, over the years the difference in outcomes when you’re paying 0.25% a year in charges versus, say, 0.5%, could be thousands of pounds. Read more about ISA mistakes to avoid.

Episode 1: Why invest?

In this episode, our experts go back to basics. Whether it’s for retirement, marriage, starting a family, or buying a bigger house – why not put your money to work in the long term?

Listen to our Investing Essentials podcast

How to get started and fund your account

Don't imagine that you need to have a lot of money to hand to start investing. While you can begin by funding your account with a cash lump sum, there are other ways to take your first steps.

To start investing with AJ Bell, you can:

• Fund your account with a lump sum – you can start investing with AJ Bell by opening an account and funding it with £500 or more
• Transfer an account – if you have a cash account elsewhere (an ISA, for example), it’s easy to transfer it to us
• Sign up to regular investing – a popular way to get started is with our regular investing service, which lets you put as little as £25 a month into an investment of your choice

Open an AJ Bell account

No matter how, why or where you want to invest, we're here to make investing feel good. Get started today.

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Just starting? Keep it simple

If you’re new to investing, AJ Bell Dodl is the app that keeps everything simple.

Learn more about Dodl