How to Start Investing as a Beginner in the UK ⋆ A July Dreamer (2024)
As a novice investor, I want to share how to start investing as a beginner especially for those in the UK by sharing how I got started 7-years ago, some of the outcomes I have experienced over years and why I recommend investing to everyone but more especially women. I call out ‘women’ because in almost any publication I read – the message is the same, there are ‘fewer women investors compared to me‘ and I think this all starts with change of mindset, education and a little bit of courage as most women are risk averse. As a fellow female, I want to encourage women to start investing for yourselves and for your future retirement.
Investing in a nutshell is simply ‘allocating money into something and expecting to benefit (from it) in a form of a positive return (aka make more money) in the future. One thing to remember is that investing is a long term financial strategy that requires patience and a clear vision of what you want to achieve in the future. A lot of people have heard of the F.I.R.E movement which standards for ‘Financial Independence & Retire Early and in order to do that, you need to have a nest egg that will continue to maintain a lifestyle you want to enjoy now and in the future. Investing is one way to be able to achieve that but a word of caution -investing can be very risky, you can make money but also lose money.
Allow me to start off with a confession, I always thought that to be an investor you needed to have a lot of money, be very well versed in finance and the like. It wasn’t until I joined my previous company where they offered free education on investing particularly investing in a single company. I didn’t fully understand all the investing lingo but I got the gist of it all and I am glad that I was able to invest into the company I worked for and understood it’s potential. This is not to say but every ‘single company’ investment would pay out the way mine did but there is a possibility.
One thing I have realised over the last 7 years of investing is that you should always invest the money you are not scared to lose. This is why many people are against investing one’s Emergency Fund because investing is a risky business and if you have a low tolerance for risk then you should limit your investment to ‘more secure’ investments. When I started investing I focused solely on investing in single shares in one company and thought investing was all about buying stock in one company and that was it. Over the last few years, I have been reading up on what to invest in and now I want to share how to start investing as a beginner in the UK.
Like I mentioned above, there seems to be a lot more men investing that women and I think for the women it is about changing one’s mindset and a little education. You don’t need to have millions in your account before you start investing and you don’t need to wait on your partner to make the decision even if s/he is good at finances. It is a known fact that women often live longer than men which means we need more money in order to retire comfortably and the earlier you start the better it will be for you when you retire.
How to start investing
Like I said you don’t need to be a millionaire to start investing, you can start with as little as £1, but before you start investing it is important to ensure your finances are in order. If you have any debt, focus on paying that off first especially those with high interest rates (via the Avalanche Method). You can use Apps like Plum, e’toro and many others to start investing, what I love about Plum is that it can help you with saving by rounding off your change and you can then invest the change if you so wish.
What to invest in
When it comes to what to invest in, as a beginner I would recommend focusing on index funds and a few single shares. I explained in my recent YT video on what to invest in as a beginner and in my initial video I explained the terminology so that beginners like me know what they are talking about.
I will be making more videos on investing and sharing what funds as well as single shares I am investing in and how they are progressing. I am investing for the long term and this is the best option for beginners who want to also invest for the future.
You cannot hold shares or investment funds yourself until you are 18. However, that does not mean they cannot benefit from starting at a younger age, as long as parents or guardians are involved too. Parents or guardians can open an account called a junior ISA (JISA) or even a pension.
A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.
The best way to invest 1000 pounds in the UK is to consider tax-advantaged accounts, such as retirement accounts or Individual Savings Accounts (ISAs), to minimise the impact of taxes on your investments.
The question of whether you can live in London with £1,000 a month largely depends on various factors, including your accommodation, lifestyle, and financial management. But the short answer, is this: It's gonna be tough. Don't be discouraged, though! If you're determined, you can make it work.
General living expenses for a decent living standard vary. It depends on lifestyle and personal preferences. However, to be comfortable you can expect to spend £1,500-£2,000 per month of your net income. This figure includes basic costs such as rent or mortgage payments, utility bills, and council tax.
It's never too late to start investing, but starting in your late 60s will impact the options you have. Consider Social Security strategies, income sources and appropriate asset allocation. A financial advisor may be able to help you project out your investment and income plan into the coming decades.
If you're 18 years old, can afford to and are happy with the risk, you can get started with investing. Over time, your money could be worth more than cash left in a zero- or low-interest account, but remember it could also be worth less.
If you have a retirement account at work, like a 401(k), and it offers matching dollars, your first investing milestone is easy: Contribute at least enough to that account to earn the full match. That's free money, and you don't want to miss out on it, especially since your employer match counts toward that goal.
What should you invest in inside your 401(k) and Roth IRA? There are many different types of investments to choose from, but Ramsey says mutual funds are the way to go! Mutual funds let you invest in a lot of companies at once, from the largest and most stable to the newest and fastest growing.
There aren't any legal restrictions on foreigners buying property in the UK. ² This means almost anyone can buy a property there, regardless of nationality. You don't need a visa to invest in UK property either, although of course you will need one if you're buying a home with the intention of living in it.
Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.
A tax-free ISA is another option if you have 50k to invest. Cash ISAs are less risky than stocks and shares, and are considered a safer safe place to hold cash. In a high-interest savings account, there is no risk and you can generate a cash bonus of 25% from the government if you don't take the money out for 5 years.
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