It’s a common misconception that you need vast amounts of money to start an investment portfolio.
In reality, it’s much more accessible than you might think.
Depending on the share dealing service you use, the initial sum you invest could be as little as£25.
However, despite this accessibility, there are some important factors to consider, before taking the steps to invest. These are: what you can afford to invest, how you would like to invest and the associated costs and charges.
Firstly, as investing is for the longer term, it is important that you put aside some savings that can cover the costs of emergencies or unplanned bills. For example, you may need to unexpectedly replace a boiler or repair your car. As investing your money is for the long run, setting aside a rainy day fund before you invest will ensure you have access to cash, if the need arises.
Secondly, it is important to decide how you want to invest - a lump sum, regular monthly investing or you could consider a combination of the two.
Choosing to invest regularly on a monthly basis can provide an effective alternative to a one-off investment. Each month your money can be put into funds, investment trusts, trackers, shares, or some combination of the four.
Finally, all investments whether as a lump sum or monthly incur charges. Investment Trusts,shares, and trackers have a share dealing or platform fee, however, funds commonly incur no platform charge but do have an entry fee. Weighing up these costs is a key factor for investors because they will impact the return on your investments over time.
It’s important to consider that the lowest and cheapest fees might not necessarily ensure you get the right product for your financial needs. Spending time researching and finding a package that works for you can boost your returns in the long run.