Investing for Beginners

Investing for Beginners

September 2, 2022

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When it comes to our finances, many of us can feel a little old-school in how we handle things. You might have a budget, you may have savings that you use for different times of the year, and you may even use a credit card of sorts or other credit facilities on offer. The one thing that will still have people puzzled is investing. There is a lot of unknown surrounding it, and often because of that people are unsure of how it works, what they will get from it, and whether it is worth it to them. 

This is where hopefully this article will debunk some of the myths surrounding investing. It will explain how it can potentially be a great way to make use of savings that you don’t need access to for longer periods of time – and the risks involved. Investing can be simple when used through a bank and their dedicated teams, and investing software can make things much easier. So let’s get to it. 

What is investing?

Before you invest your money into anything, it is important that you take the time to understand what investing is and how it can potentially be worthwhile to you and your financial future. So first up, what exactly is investing? When you invest in something, you are buying into that with the hope that the money you invest will grow over time.

But an investment is not guaranteed. It can jump up and down in price, so the thing you should always remember is that in some cases, you may not get back all that you have invested. 

HSBC Investing for Beginners

What is the difference between shares and funds?

You can invest in either funds or shares. Funds are a ready-made basket of investments. When you invest in funds, you’re buying into a mix of assets, which may include shares, property, government bonds and cash. Shares are where you buy a stake in a company. Many people who are investing for the first time will invest in funds and move onto shares as they get more confident. Funds save you from trying to pick individual investments that you think will perform best. 

Where should I invest first?

It is entirely up to you where you invest first. You may already have an idea of a company you want to invest in, given the news or the industry they may be in. However, many people investing for the first time consider investing in funds so that they can learn how investments jump around and feel more comfortable with their options. 

How do I invest?

So you like the idea of investing, but how do you invest? This is where people get a little stuck. Thankfully, HSBC has provided an in-depth article all about just that. It’s a little more simple than you might think, and as long as you are comfortable with taking a degree of risk and don’t need to access your money for some time then you are good to go. It is important to understand your financial situation and what your financial goals are before making any investments. 

Investing for Beginners

What sort of time should I expect to keep my investment?

There is no expected time that you should keep an investment. This is entirely up to you. However, when investing, it is seen as a long-term option for savings and money, rather than a short-term fix. So on average, it is worth leaving investment in place for around five years. 

Of course, if your investment is doing well you may want to reap the rewards, but it is also advisable not to get too hasty if things don’t seem to be going your way. After all, investments can move up and down very rapidly, and it is also essential to be comfortable with not needing that money for any length of time. 

Tips to help you when investing 

If you are considering investing, make sure you still have access to some savings that can be used for your short-term financial goals and also emergencies. You should always be mindful that the higher the potential reward often means the higher the risk of losses. This is why it is so essential to be aware of your current financial position and what your financial plans are for the future. 

Is it worth it?

The truth is, only you can answer that question. Doing all of the necessary research ahead of time should be able you to decide whether investing is worth it to you. Investing can be very lucrative, as long as you are comfortable with the risk that is also involved. 

Hopefully, this has made you more aware of what investing is.

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