Financial planning / Investments

When should I start investing?

Investing is an important part of your financial strategy, but one which might only factor into your plans when you’ve built up some wealth. Huw Wedlock, Director of our Singapore Office, shares his thoughts on the best time to consider your investment strategy.

Starting to invest

No matter what your age, there are saving and investing options. Fixed rate children’s savings accounts, Junior ISAs and Junior SIPPs (pensions) can be accessed from  birth. Of course a parent or guardian will need to set things up, and you will need to be UK resident for ISA or SIPP options, but these can all be worthwhile investment vehicles. Our recent article about saving for grandchildren or young people shares further detail on these options.

Time in the market

If you begin investing at the start of your career, perhaps in your twenties, you will give your money a good amount of time to grow. It’s worth noting that, over time, long-term investing has the prospect of performing better than standard savings or current accounts, although of course there are never any specific guarantees. In your early career you might also be happy to consider more risk than when, for example, you are nearing retirement. Whatever your approach, it’s important to work with a qualified adviser so you can explore your own attitude to risk.

Tax-efficient options
If you pay UK tax it’s useful to consider tax efficient investment options to protect your hard earned capital without tax nipping away at it. Some of the most popular options include:

  • Stocks and shares ISAs – allowing you to save up to £20,000 a year
  • Pensions – enabling you to save £40,000 with the government adding back the tax
  • Lifetime ISAs – which can be opened if you’re under 40 and allow you to pay in up to £4,000 each year until you are 50 with the government adding a 25% bonus, up to a maximum of £1,000 per year

Where to invest

There are lots of options over where you might invest your money, from single company stocks to a discretionary managed portfolios. You may have a preference for a particular business, especially if you are knowledgeable about the company and the sector in which is operates. Another option is a passive fund which tracks the performance of  a market index, such as the FTSE 100.

If you are working with an adviser you may want to consider a managed portfolio service, which gives you access to a mix of different assets. This option can help you create a well-diversified investment portfolio, which might help to even out the peaks and troughs, as share prices rise and fall.

Key takeaways when investing

There is always much to consider  when you think about how and where to invest. However, some general guidelines can be particularly helpful:

  • Start small and build your confidence and habits by setting up regular payments every month
  • Consider reinvesting any dividends which may help your money to grow faster
  • Work with an adviser who can help you build a strategy which reflects your own financial and personal goals

To discuss any aspect of your finances, including investments, please contact your nearest office.