New to investing? Here are some tips to get you started

For beginners, the world of investing can be a daunting place – from deciding which funds to pick to simply deciphering the jargon.

But it’s important to remember that even the most experienced investor was once sitting where you are now. At its simplest, investing is about two things: protecting and enhancing your wealth.

To help get you started on your investing journey, here are a few simple tips you might want to consider. Once you've read through these, take a look at our Learn hub and Jargon buster to get you ready and feeling good about investing.

1. Think about your investment goal and time horizon

Most people save and invest to achieve a certain goal. Knowing what that goal is – from buying a first home to travelling in retirement - and when you want to achieve it is a good starting point in developing your investment strategy.

2. How much risk do you want to take?

The volatile market conditions caused by the pandemic, Ukraine war, inflationary pressure and sharp rise in interest rates were a stark reminder that stock markets can go down as well as up, particularly in the short-term.

Having determined your time horizon, a sensible next step is to consider the level of risk you are willing to take to achieve your goal. Historically, those who have invested in stocks and shares have generally been rewarded over the long term (and by long term I mean decades rather than months or even years). But the price of this is often significant volatility in the short term.

Understanding your attitude to risk is an important step in any investors journey. To better understand yours, make sure you watch our recent Q&A below with our Head of Investment Partnerships, Ryan Hughes and read our article on investment risk.

3. Consider the role cash can play in your investment strategy

Even if your investment time horizon stretches out for decades (often the case for those saving for retirement), it is still important to build a cash buffer you can use if things go wrong.

Having a decent chunk of money readily available in an easy access account could be a vital part of a sound financial plan. You should consider holding at least three months’ fixed expenses in such a rainy-day fund, and make sure you shop around for the best interest rate available. Take the fuss out of finding the best rates and browse the competitive rates in our Cash savings hub.

4. Investing small and often can help smooth out the bumps

Once you’ve decided on your investments based on your time horizon and attitude to risk, you’ll need to think about how often you want to invest.

A good way to get in the habit is to consider investing relatively small amounts at regular intervals, usually monthly. This also has the added benefit of smoothing out your investment returns during periods of severe market volatility.

We want to make investing small and often as easy as possible, that's why we created our regular investment service. It's easy to set up once you've opened an account and lets you invest monthly with as little as £25 with a discounted dealing charge of £1.50.

5. Keep your costs as low as possible

One of the best ways to maximise your investment returns over the long-term is to keep your costs as low as you possibly can. While differences in costs may appear small in percentage terms, over years the difference in outcomes when you’re paying 0.25% versus, say, 0.5%, can run into thousands of pounds.

Episode 1: Why invest?

In this episode, our experts go back to basics. Whether it’s for retirement, marriage, starting a family, or buying a bigger house – why not put your money to work in the long term?

Listen to our Investing Essentials podcast

How to get started and fund your account

Don't imagine that to start investing, you need to have a lot of money to hand. While you can begin by funding your account with a cash lump sum, there are other ways to take your first steps:

• Lump sum – you can start investing with AJ Bell by funding your account with £500 or more.
• Transfer an account – if you have a cash account elsewhere (an ISA, for example), it’s easy to transfer it to us.
• Regular investing – a popular way to get started is with our regular investing service, which lets you put as little as £25 a month into an investment of your choice. Taking it slow and steady isn’t just more forgiving on your finances. It can also cushion you from investing’s ups and downs, and saves you from having to worry about ‘timing’ the market to find the right moment to invest. Learn more about what regular investing involves.

Open an AJ Bell account

No matter how, why or where you want to invest, we're here to make investing feel good. Get started today.

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Just starting? Keep it simple

If you’re new to investing, AJ Bell Dodl is the app that keeps everything simple.

Learn more about Dodl