Investing is the only way these days to really grow your wealth. Of course, it comes with some risks (you could end up losing what you put in) – but if you let your cash sit in a low-interest savings account, that’s already losing spending power just sitting there! Interest rates are below inflation at the moment – which means every £1 you put in this year will have less buying power next year. That’s why investing is often worth the gamble – if you can afford to spare the capital.
You don’t need to know a ton of stuff about investing to get started, either! Here are the three ways for newbie investors who have a little spare cash to invest each month.
- Invest in a Stocks and Shares ISA
- Use a Crypto Bot for Easy Cryptocurrency Investing
- Follow Investor Profiles to Mimic Their Investments
- Learn More with MoneyMagpie Investing Webinars
- More Investing Tips
We’ve been banging this drum since MoneyMagpie was founded in 2009. And for good reason! Cash ISAs have historically low returns. Long-term savings with low interest rates is a bad combination!
Instead, because you know you’re putting this cash away for more than a few years (such as saving for your retirement nest egg), you have time to ride out the ups and downs of the stock market. Equities ISAs are a great way to start investing, because they can do the hard work for you. You don’t need to know anything about the stock market to start investing through a stocks and shares ISA!
You simply opt for one of the set investing options offered by your ISA provider, depending on your risk appetite. That means how much you’re willing to potentially lose the money you put in. The higher the risk, generally, the higher the reward. But, obviously, as it’s riskier, you could lose everything you paid in. A low-risk option is better if you want to slowly grow your savings over a long period of time. The types of investments are different between the two – higher risk options go for newer businesses or more volatile industries. Lower risk is mostly made up of Government bonds and reliable time-tested investments.
Every year, you can pay in up to £20,000 into your ISA. In fact, you can have a Cash ISA and and Equities ISA, a Lifetime ISA AND an Innovative Finance ISA, and spread your £20,000 across them if you like. Your limit is always £20,000 – whether you put it into one account or split it across several ISAs. You can only pay into one of each TYPE of ISA each year – i.e., if you set up a Cash ISA years ago and then opened another one this year, you’d have to choose which of those two Cash ISAs you paid into this tax year. You can change it in the following tax year.
Transfer, Don’t Take Out!
When you open a new ISA of any type, whatever you do, do NOT physically take out the cash from your existing ISA(s) to pay into your new one! Paying that cash in eats into your £20,000 allowance. Instead, use the ISA transfer process offered by your bank. Transferring funds from one ISA to another does not count towards Personal Allowance usage.
Why are ISAs a great idea? Not only does a stocks and shares ISA make it really easy to invest (and, with profits, re-invest for more wealth growth), your savings are tax-free, too. Everyone can earn up to £1,000 in interest each tax year when their cash is in any other type of bank account. Any interest over that allowance is taxed. That is, of course, unless you’re earning on cash in an ISA – which is exempt from this £1,000 limit.
The next way to invest is a much newer option that’s gathering speed in the investing world. You’ve heard of Bitcoin – well, there are lots of newer cryptocurrencies out there, too, and that means there are ways to invest and make money from them.
We’ve got some detailed guides on cryptocurrency, including how to make money mining Bitcoin. That takes a little tech savvy and know-how though, so if it sounds like too much work for you, consider using a crypto bot to do the hard work for you.
Unlike the stock market, which closes and opens daily, crypto is a 24/7 market. So, you could have lots of currency when you go to bed, and wake up with nothing left! The market is very volatile, too, which makes it more unpredictable than the stock market. Crypto bots help you mitigate these two obstacles to investing in cryptocurrency effectively.
Choosing a crypto trading bot that works for you is important. Do your research, read reviews, and make sure you’re investing in one that’s suitable for beginners! A trading bot that uses preset profiles is a good way to get started – they won’t often yield the top returns possible, but they will mitigate the higher risk of cryptotrading better than attempting to manually set your bot to manage your trades. Once you get more confident in understanding how crypto trading works, you can move over to manual management of your bot if you like.
If you want to get stuck into the stock market, but you’re not sure where to start, many trading platforms let you follow other investors. You can view their profile and see what they’re investing in, and when. If you like what you see – you can copy it!
Of course, it’s worth saying here that the profiles you follow aren’t considered financial advice, and you have no recourse if you mimic a profile that then dives and loses money. However, if you carefully trace an investor’s history, it’s easy to see if they have a gut for making good decisions. No one gets it right all the time, but those with a long-term consistency in generating profits are worth a look.
Set up a trading account on a platform like eToro and it’s easy to find profiles to follow. Look at lots of them – it’s worth noting the familiar stocks that lots of the successful investors own. That’s a good indicator (but again, not financial advice!) of a potentially strong stock to consider investing in.
Following accounts like this helps you get a feel for the stock market and teaches you more about investing for yourself. It’s a more hands-on approach, which is ideal for anyone who wants to understand the stock market on a deeper basis. You can even set up practice profiles with pretend money before you start investing your own capital, to see if you’ve got a grasp of the stock market before you use real cash!
We believe that investing is – truly – for everyone. You don’t need to have tons of spare capital lying around to start investing, either. Even setting aside a tenner a month is enough to start building a nice little nest egg for your future.
That’s why we’re running regular investing webinars – live chats with Jasmine where you can ask your investing questions (though remember: it’s not formal financial advice and your mileage may vary on all investments). Some are free, too! Click here to find the next investing webinar to join.
You can also sign up to our regular investing newsletter. Get investing tips and tricks to your inbox direct from Jasmine! Click here to sign up.
Want to know how to get started as an investor? Check out these popular articles next!
- Investing in Gold – The Total Guide
- Investing for Income When You’re 50+
- 10 Ways to Grow Your Money
- Index-Tracking Funds – The Easy Way to Invest in the Stock Market
*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.