Investing can be your ticket to making your money work harder than you do, and the quiet confidence that comes with building wealth on your own terms.
You might have already started investing, or maybe this is your first rodeo. But if you want to become a pro, there are some basics you need to have covered.
Here are five things to keep in mind to up your investing game.
1. Get to know your investment.
Don't just go with the hype – take the time to truly understand what you're investing in. There’s a whole world of investments out there, from shares in companies to more complex and high-risk options like crypto, contracts for difference (CFDs) or forex (foreign exchange trading).
Ask yourself: What exactly am I investing in? How does it work? Who's behind it? And, most importantly, can I access my money if I need to? Don't hesitate to ask questions until you fully get it.
Remember, if an investment opportunity seems too good to be true, it likely is.
2. Risk is in the game
Every investment carries some level of risk, some more than others. So, make sure you're comfortable with the potential ups and downs.
Can you stomach the possibility of losing some or even all of your investment? If you're chasing those high returns, are you prepared for the potential downside?
Diversification is your friend here. Spread your investments across different areas so if one doesn't do well, others can potentially help pick up the slack.
3. Are your investments regulated?
In the UK, many firms offer services regulated by the Financial Conduct Authority (FCA). This means they have to follow certain rules to protect you. However, there are many activities they don't regulate, like direct investments in things like crypto or gold.
In those cases, you likely won't have access to the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS) if things go wrong. So, it’s crucial to understand the regulations of any particular investment before you dive in. The FSCS was set up to provide compensation under certain circumstances if an authorised firm can’t pay claims against it, and FOS settles complaints about authorised firms.
4. Protection matters
Before you commit to an investment, find out what protection you have if things go south. If you're dealing with an unauthorised firm, you might be left high and dry if they go bust.
Check the FCA register to see if a firm or individual is authorised before you invest.
5. When in doubt, get advice.
If you're feeling overwhelmed, or just want a second opinion, talk to a financial advisor. They can help you create a personalised plan that aligns with your goals and the level of risk you’re willing to take.
Just make sure any advisor you consider is also regulated by the FCA, which you can do by checking the FCA Register.
The bottom line
Investing is a marathon, not a sprint. It's about making smart choices, being patient, and understanding that there are no guarantees.
Again, if an investment opportunity sounds too good to be true, it probably is. Do your homework, ask plenty of questions, and never invest more than you can afford to lose.
To find out more, visit the FCA’s InvestSmart website
Featured Image Credit: FCA
Thomas Thorn