Investing for the First Time

Investing in the stock market for the very first time can seem a daunting task, but a decade of low interest rates has caused returns on cash savings to be greatly diminished, forcing many people to consider shares if they want a decent return on their money.

In 2017 the FTSE 100 index gained 11.9pc and over the past three years it has returned 31.5pc.  By contrast, savings rates are typically about 0.5pc Setting up a savings account is relatively straightforward and involves no risk to your cash, other than inflation.  By contrast, investing in the stock market, with thousands of companies and a plethora of funds to choose from, can seem an altogether different challenge, even once you have decided to stomach the risks.

The biggest mistake among first-time investors is tinkering with their portfolio too often.

Investing in the stock market is a long term project and the best returns will be made by choosing a strategy and sticking to it, even if there are bumps along the way.

Set things up and leave them alone.  This might sound counterintuitive and we do encourage structured reviews, but there’s likely to be more potential for harm by tinkering too frequently.  When a portfolio falls, as it inevitably will from time to time, the best advice is often to hold tight.

John BaxterComment