How to ACTUALLY start investing?

Many of us are still not ready to take the step towards investing and one of the more common reasons is not knowing how to and the technicalities of it. In this newsletter I want to provide you with actionable steps towards your first investment 🏆.

I don’t recommend investing in individual shares or day trading, so I will focus on how to invest in index funds. I want to stress the importance of investing for the long term as this is where you make real gains and can avoid the ups and downs of the market.

1. Choose a platform 🏦

   There are a few types of platforms in the UK, each with a slightly different offering as well as fees.

   • traditional investing platforms - Vanguard, AJ Bell and Hargreaves Lansdown. Great for low fee index fund investing. You may need to do more research on them and what funds they offer, but once you understand the basics, value wise they are a good choice. I invest with Vanguard and their typical fees are around 0.35%.

   • robo investors 🤖 such as Nutmeg, Wealthify, Moneybox, InvestEngine and Moneyfarm. They often have higher fees, but tend to be more user friendly with modern apps and can advise on investments choice.

   • high street banks - your Barclays, Lloyds, HSBC, etc.

   • social share dealing apps - Trading 212, eToro and Freetrade. They have forums and communities within the app where people can share knowledge and industry news. Worth noting that on Trading 212 you can also invest in index funds and they even have Vanguard funds available.

2. Open an account 💳

   The most tax efficient accounts are a stocks and shares ISA (most popular), a SIPP or a stocks and shares Lifetime ISA.

   • Stocks and shares ISA (individual savings account) is like a tax wrapper around your investment. Any returns within this account won’t be taxed.

   • SIPP - self invested personal pension. Another great way to invest for retirement with great tax benefits, but you won’t be able to access your money until 10 years before state pension age.

   • LISA - the house deposit saving cousin with an investing aspect. You can use it for your retirement, but it does have some limitations.

3. Choose your investment 📈

   This is where things can get a bit more complex as all these platforms will offer many different funds and stock options. As there’s so much choice, I will only cover the funds I would invest in.

   • Target date funds - most traditional platforms will have these. If you want to keep it simple and just have one fund, this is a great choice. You pick your ideal retirement date and the fund will gradually shift to a more conservative portfolio as the target date approaches. Nice and easy.

   • Index funds - a single investment that comprises of thousands of shares and bonds. Like a basket with loads of companies shares. Index just means a list of companies tracking a particular market index like the FTSE 100 or S&P 500. When choosing an index fund, I would look for the following:

     👉 Global equity (shares) - broad market index helps spread the risk.

     👉 Accumulation or income - accumulation reinvests into the fund and income pays you cash. Choose accumulation to allow your money to grow.

4. Set up a monthly transfer 💷

   Once you choose your investment, the last thing to do is to set up a standing order to invest into your chosen fund every month. Most platforms have a minimum amount to start with.

   Vanguard for example has a minimum lump sum investment of £500 or £100 monthly. Other platforms like Trading212 have much lower minimums, so it’s easy to get started.

I hope it helps you take further steps toward investing for your future, but if you have questions I’m always happy to chat 🤙 

My weekly recommendation

Watch this brilliant video from Damien Talks Money to fill in the gaps!

Until next time ✌️

Lina at Money Blues