What is investing and how do I get started?
C4L editorial team
Read this article to understand what investing is, key terms you should know and how to start investing for the first time.
What is investing?
In its simplest term, investing in something is when you buy something with the hope that it will increase in value. However, there is no guarantee of this and it is the biggest risk of investing – the things you buy might not increase in value at all. They could even lose value.
There are a number of different ways you can choose to invest, including stocks, shares and funds, but for the most part people invest their money in stocks, which is what this article will focus on.
Why do people choose to invest?
If you have savings you would like to grow long term, investing can be a good way of making money work hard to give you more back in the longer term. It can be better than interest rates on saving accounts, but again it is worth saying that with this comes a bigger risk, you can make money from investing, but you can also lose it all. The rule of thumb is to only invest money that you can afford to lose.
The Stock Market
The stock market is a bit like a supermarket, but where people sell and buy shares (small parts of businesses that people purchase). People sell shares of businesses to support the growth of the business and make it successful and profitable. So if you buy shares in a company, you essentially own a tiny slice of that company.
The worth of a company can rise and fall dependent on a number of factors, how well the company is performing, but also how healthy the economy is generally. If you want to understand more about the economy and how it works, read this article.
How to get started
You need to be over 18 to start investing yourself.
Understand how much you can afford to invest. (Remember, there is no guarantee you will earn money and there is a possibility you could lose it, you don’t need a large amount of money to start investing)
Take a look at investing in an ISA first if you haven’t already!
Do your research
See some sites below for you to get up to date information on shares and funds:
Help Choosing Funds from Hargreaves Landsdowne
Insight and Ideas from the interactive investor website
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