Investing 101: Here’s How We Should Be Investing Our Money

CREATED IN PARTNERSHIP WITH INVESTEC CLICK & INVEST 

Putting your money somewhere without knowing for sure how it’s going to perform is definitely a risk, but one that more of us – particularly women – should be making. Investec Click & Invest’s research shows that as many as 1.8 million women avoid investing and opt for growing their money in a savings account instead.

So given our level-headed nature, we should give it a shot, right? But we know that putting your hard-earned cash into a system that is in a constant state of flux is a thought that could intimidate even the most money-savvy, which is why it’s important to make sure you know how the system works before getting carried away. We spoke with Investec Click & Invest’s CEO, Jane Warren, and Investment Manager, Alex Neilson, to find out the basics.

Why do women choose not to invest?

Jane: The number of female investors is on the rise, but there is still a way to go to close the confidence gap between men and women. Whilst men are more likely to feel confident, excited or in control when taking financial risks, women are more likely to feel anxious or scared. Our insights have shown that there are as many as 1.8 million women in the UK who avoid investing, so we need to empower women with the tools, knowledge and confidence to invest and boost their savings.
 

If women are worried about risk, where’s the safest place to start investing?

Alex: Investing with a service that you can trust is the best start for any first-time investor. That way, you can rest assured that your money is being invested the right way by investment experts. That being said, any investment can go up or down in value, so it’s important to diversify your portfolio to balance your exposure to risk. (Keep reading for an easy to understand definition of diversification). Online investment services like Click & Invest are straightforward and we ensure your investments are suited to your risk profile and long-term financial goals.
 

How much should beginners invest?

Alex: You need to think about your financial goals and how long you have to reach them. Up to three years is considered a short-term financial goal and such funds may be better off in a savings account. It’s wise to keep some money in a savings account for any unexpected large payments, from broken boilers to car breakdowns. Everyone’s personal circumstances are different and it really comes down to how much you are comfortable putting aside. We’ve got a useful guide on our website that you can download, to better understand the differences between saving and investing.
 

How would you explain the stock market to beginners?

Alex: Shares are basically a very small fraction of ownership of a company, and as owners you are entitled to the profits of the company via dividends (a sum of money paid regularly by a company to its shareholders out of its profits). The stock market is a place to trade these fractions of companies. People might be familiar with the FTSE 100 index (Financial Times Stock Exchange 100) which is a share index of the 100 largest companies listed on the London Stock Exchange – this is just one of the stock markets that exist globally.
 

Is it easy to make money from the stock market? 

Alex: Patience in the stock market is key, so we always recommend taking a medium to long-term view on your investments to give yourself the best chance of growing your money. Making money from any investment is about having a clear strategy. Novice investors shouldn’t only look at the stock market but instead seek out a diversified portfolio of investments which include different asset groups, such as bonds and gold.
 

What does ‘diversifying’ mean?

Alex: Diversification is a technique used by investors to manage risk on their investments. It means taking on different types of investments, so not just stocks and shares but also property or gold, for example. It really is that simple – but it’s important that these terms are explained without jargon, which can confuse even the most engaged novice investor.
 

How should you know when to withdraw your funds?

Alex: We recommend that investing should be for the medium (three-five years) to long-term (five years and over) – this means your money is invested for long enough to ride out any dips in performance. The misconception with this explanation is that people feel they are locked in and can’t access their money, which isn’t the case. With Click & Invest you can access your money at any time and there are no withdrawal fees. This is something always worth checking before you commit to any service.
 

How can you find out what’s up-and-coming on the market?

Alex: If you have the time to do it yourself, talking to friends, watching the news and researching companies online can be really helpful. However, if like the majority, you don’t have the time or inclination to monitor investment opportunities, our experts do this for you and update you on the performance of your portfolio, as well as any changes that have been made. We believe that investing really can be as easy as that. We also have a section on our website which provides digestible information for anyone trying to get to grips with investing.
 

What should you look out for when choosing an online investment service?

Alex: Some of the simplest ways to spot a good service is by looking at their track record and the heritage of the platform. You should also keep in mind what type of service you are looking for. For example, we are a discretionary service, which means that we invest on behalf of our clients, so they can be sure their money is being looked after. The advice we offer is known as simplified advice, which means we only take into account the amount of money that you have told us you would like to invest and not your overall financial situation.
 

What are the benefits of using Click & Invest?

Jane: When we launched Click & Invest the goal was twofold: firstly, we wanted to open the door to investing, helping people invest their money confidently, and secondly to make a difference to more financial futures, creating a service that allows our clients access to Investec’s investment experts.
 
We understand that knowing the difference between saving and investing can quickly become complicated. So we’ve designed a guide to help you understand the differences to help you decide what could be best for you.
 
Find out more information about investing and Click & Invest, visit ClickAndInvest.com

It is always worth remembering that the value of your investments can go down as well as up and you may not get back the full amount invested. Your capital may be at risk. This article is not intended to constitute personal advice and no action should be taken, or not taken, on account of information provided.