If you are thinking about buying an investment but you are fairly new to investing, take some time to familiarise yourself with the terminology. Any term you come across here you can enter in the search box and a brief explanation should pop up. (If there’s something we’ve missed, please let us know using the contact us tab and we’ll get it added)
Don’t invest more than you can afford: The first thing to think about is how much money do you have available to invest? Think about whether you are prepared to hold your investment for the long-term (years not weeks). If you might need to cash in your investment in a hurry, this restricts the type of investment you should be making.
Don’t forget the cash you have now might be needed in the future: Factor in things like long-term debts such as mortgages as well as short-term ones like credit cards.
Borrowing to invest is dangerous: Borrowing money to invest in high risk investments could leave you in a much worse position – make sure you can survive the loss of your investment.
Could you survive the loss of your investment?: Remember when you make an investment there is almost always a chance you could some or lose all of your money – that chance is higher for some investments than others – we go into this in more detail here.
Keep some money for emergencies: You should have some readily accessible savings in a bank or building society before you think about investing in shares. This makes sense because you might find you need sudden access to cash at a time when your investments are not doing so well – beware of being a forced seller.
Think long-term where you can: Investing for the long-term lets you sleep easier at night when short-term movements in value go against you.
Think about your attitude to risk: One of the most important decisions you’ll need to make is how much risk you are willing to take. Risk is really all about two things – the chance of losing some or all of your money and the chance that, over the short-term, the value of your investment might change dramatically (volatility).
Hold a spread of investments: Don’t put all your eggs in one basket – holding a spread of different investments reduces the chance that a single outside factor will have a big impact on your wealth.
But don’t go overboard, factor in dealing charges: But remember, because of the charges associated with dealing in shares, it often does not make sense to invest small amounts of money this way.
What goal do you have for this money?: Think about what you hope to achieve from your investments? For instance, do you need an income now or are you saving for an event in the future?
Financial advisers are there to help: And, above all, if in doubt ask a financial adviser.
QuotedData can’t advise you: Remember here at QuotedData we are not allowed to give you investment advice and nothing we say on this site should be taken as a recommendation to buy or sell any investment.
You can access a pdf version of this page Helpful Stuff from QUOTEDDATA – A few tips before you get started