We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.
Investments involve putting money into something such as shares, property or cash in the hopes of getting a profitable return. With low interest rates affecting products, many people consider investment as a good way to increase their funds returns. While there is risk involved, returns could be higher than simply saving into a regular account.
But considering investments before they are actually undertaken is important.
Express.co.uk spoke to James Norton, Senior Investment Planner at Vanguard, who urged Britons to think carefully about their investments.
Taking time to analyse and plan, he said, could stand people in good stead, especially if they are new to investment.
He said: “Investing can be hard, especially for those who are new at it. Plenty of people have been investing for a long time, and often we learn from our mistakes.
“I think that if people do a little bit of research beforehand, that is the most important thing, as it can help you understand what to expect.
“But then, above all else, you should be considering the four key steps of investment: goals, balance, cost and discipline.”
When it comes to the first point, Mr Norton said, analysing what a person wants to achieve in the long and short term is key.
This is because it allows people to effectively structure a portfolio – whether this is through a stocks and shares ISA, a pension or other methods.
Junior ISA: The steps that could earn children thousands [INSIGHT]
Preparing for the new tax year? This is how Britons can get ahead [ANALYSIS]
Pension warning: Britons could lose out on thousands with this mistake [INTERVIEW]
Next, keeping costs as low as possible means potentially saving thousands in the long run.
But there is one other point which can be difficult for people to consider.
He added: “Discipline is key, but it is often difficult to keep up. Once you’ve established your goals and costs, leave them alone. Keep them as simple as possible.
“Ultimately, to keep up your discipline you should be writing your goals down, even if it is on one side of A4 paper. Set down what your portfolio looks like and then implement it.”
There is, however, one key mistake to bear in mind when making an investment, and it can often affect many people.
Mr Norton concluded: “Our emotions can often take over and affect the way we invest – so it is important to be aware of this and really understand your investments.
“Markets fluctuate, and this is particularly true during COVID-19. This may make people want to sell off quickly, but such an action could ultimately damage your returns.
“Don’t be overconfident with your investments or be lulled into a false sense of security, as you could end up taking more risk than usual.”
The Money Advice Service has added that when investing, it is important to review periodically.
However, much like Mr Norton stated, looking at a portfolio too often can often lead to mistakes.
The website states: “Research shows that investors who watch their investments day to day tend to buy and sell too often and get poorer returns than investor who leave their money to grow for the long term.”
As such, those who are investing are encouraged to leave their money to ride out any fluctuations if they are a long-term investor.
Avoiding high risk products is a key move for those who are newer to investment and may not understand the specific risks involved.
Finally, for those who are unsure, some may wish to speak to a financial adviser.
These individuals can provide in-depth help which can relate to a person’s specific circumstances.
Source: Read Full Article