Investing for Beginners: A Guide to Getting Started

a colourful graph showing how to invest for beginners

The investment scene can be tough to navigate if you’re a beginner. There are many factors to consider when choosing the right investment avenue for you, and it’s important to approach investing with a clear strategy and informed decisions.

Whether you’re investing to grow your wealth, save for retirement, or achieve other financial goals, we’re here to help you get started.

Read on for our guide to investing for beginners – from conducting thorough research to diversification, we have all the information you need to get started on your investment journey.

 

How Do You Earn Money From Investments?

You can earn money from investments in several ways, including dividends, appreciation, and regular interest payments.

Dividends: When you invest in stocks, some companies pay out a portion of their profits to shareholders as dividends. These are essentially rewards for owning their stock. You can receive these regularly, providing you with a steady income stream.

Appreciation: Many investments, such as stocks, art and real estate, can increase in value over time. This is called appreciation. For example, if you buy a piece of art for £5,000, it could increase in value over time if the artist increases in popularity, or the demand for the artwork increases.

Interest: Bonds and savings accounts often pay interest. When you lend money to a company or government by buying a bond, they promise to pay you back with interest. Similarly, when you put money in a savings account, the bank pays you interest for keeping your money with them.

 

Top 10 Investment Tips for Beginners

Here are 10 helpful tips that can help you begin your investment journey, from conducting sufficient research to including alternative investments in your portfolio.

 

1 – Conduct Thorough Research

First of all, whether you’re a seasoned investor or a beginner, it’s important to conduct thorough research. Take the time to understand different types of investments, such as stocks and shares, bonds, mutual funds, and exchange-traded funds (ETFs).

Understand risk and return, and determine your risk tolerance/ your ideal level of risk. Consider how much you are willing to invest and how much you are able to lose. It’s equally as important to consider the factors that could influence the performance of your investment – for example, market trends and economic indicators.

Be sure to research various investment options, platforms and brokerage firms, and find an avenue that aligns with your financial goals, risk tolerance, and preferences.

 

2 – Set a Budget

Setting a budget is a key step in any financial transaction, including investing. Determine how much money you can comfortably put towards investments without compromising your day-to-day expenses or emergency savings.

Whether you’re starting with a large lump sum of £100,000, a mid-size sum of £50,000, or you’re planning to invest regularly over time, having a clear budget can help you stay disciplined and avoid unnecessary risks.

 

3 – Diversify Your Portfolio

Diversification can help to minimise risk – it’s a key aspect of successful investment. Spreading your investments across different asset classes can help mitigate risk and improve the chances of achieving consistent returns. You may have heard the saying ‘don’t put all of your eggs in one basket’ – this applies perfectly to investing. Instead of only investing in stocks, invest in real estate, bonds, and other alternative assets too.

 

4 – Opt for Low-Risk Investments

If you’re a beginner, we recommend that you start with low-risk investments to reduce the risk of losing money.

Although safe investments such as savings accounts and government bonds may offer less attractive interest rates, they can be a great option for beginners. For example, when investing in the stock market, opt for blue-chip stocks – these are stocks in companies with a history of stability on the stock market.

As you gain experience and confidence, you can gradually explore higher-risk investments with the potential for greater rewards.

 

5 – Consider an Investment ISA

An Individual Savings Account (ISA) offers a tax-efficient way to invest your money. With an Investment ISA, you can invest up to a certain limit each year without paying tax on the returns.

This can be ideal if you’re a long-term investor looking to maximise your gains over time. Before opening an ISA, whether it be a regular ISA or a Stocks and Shares ISA, be sure to compare different providers and consider factors such as fees, investment options, and customer service.

 

6 – Invest for the Long Term

Investing is a marathon, not a sprint. Although short-term fluctuations in the market may occur, focusing on the long-term performance of your investments can help you overcome small setbacks and achieve your financial goals. So, instead of trying to time the market or achieve quick gains, stay committed and watch your money grow over time when investing for the long term.

However, if you’re looking for a short-term investment, you could opt for investments such as government bonds and money market accounts.

 

7 – Consider Additional Costs

Be sure to factor in any additional costs when beginning your investment journey. Some additional costs may include broker fees, fund management fees, and taxes.

If you opt for tangible investment such as whiskey investment, wine investment or art investment, consider costs such as insurance or storage fees. Any additional fees can significantly impact your overall returns.

 

8 – Get Expert Advice

Knowledge is key when it comes to investing, and in many cases, research alone is not enough. This is why many investors seek financial advice for insights and guidance. Speaking with a financial advisor or investment expert can help you set realistic goals and develop a quality investment strategy. Likewise, an expert can provide you with ongoing support and assistance throughout your investment journey.

 

9 – Don’t Neglect Alternative Assets

As well as investing in traditional investments such as stocks and bonds, it can be beneficial to invest in alternative assets too. This can help to diversify your portfolio, reduce the risk and provide an opportunity for growth.

Some alternative investments may induce real estate, cryptocurrency, commodities, and art investment. There are typically five main classes of alternative investments – real estate, natural resources, private capital, infrastructure and hedge funds.

It’s important to note that alternative investments come with their own risks and considerations. Before you invest your money into alternative assets, be sure to conduct thorough research and gain an understanding of the potential risks and benefits involved.

 

10 – Combine Your Passion with Profit

Investing can be financially rewarding, but traditional investments may not be for everyone. As a beginner, it can be helpful to begin with investments you’re passionate about.

For example, if you’re an art lover, you could start by investing in art. Buying and selling art for profit can be advantageous if you already have knowledge of the art market. Art can be a great way to diversify your portfolio and generate attractive returns. When you invest in art with Grove Gallery, you can expect annual returns of up to 12%. We can help you discover new talent, or acquire pieces from well-known blue-chip artists such as Banksy or Andy Warhol.

Likewise, if you’re a fan of collectables, why not turn your passion into profit and turn them into an investment?

 

Final Note

Ultimately, investing for beginners can seem daunting, but with the right knowledge and approach, it can also be extremely rewarding. If you conduct thorough research, set a budget, diversify your portfolio, and seek financial advice, you can increase your chances of success.

Whether you’re investing for the short term or planning for the long term, remember to stay disciplined, stay informed, and stay focused on your financial goals.

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last call before our waiting list starts

From September 2023 we will be locking down our fine art investment ownership and you will have to join a waiting list. To add Fine Art Investments to your portfolio fill your details below and one of our advisors will be in-touch.

By submitting this form you agree to our terms & conditions

last call before our waiting list starts

From September 2023 we will be locking down our fine art investment ownership and you will have to join a waiting list. To add Fine Art Investments to your portfolio fill your details below and one of our advisors will be in-touch.

By submitting this form you agree to our terms & conditions

last call before our waiting list starts

From September 2023 we will be locking down our fine art investment ownership and you will have to join a waiting list. To add Fine Art Investments to your portfolio fill your details below and one of our advisors will be in-touch.

By submitting this form you agree to our terms & conditions

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