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Top 10 rules for investing

• 3 min reading time

Are you ready to invest? Before you get started, here are our top 10 rules for investing.

1. FIND OUT ABOUT YOURSELF

Have you asked yourself the important questions? How much spare cash do you have today; and where are you heading tomorrow? The answers will help you work out your life stage, how much time you can afford to put the money aside for and how much risk you are comfortable taking. Only then will you know which investments may be right for you.

2. KNOW YOUR ASSETS

With so many types of investments on offer, a great place to start is to learn about the various options. Begin by reading about the pros and cons of each type of asset and vehicle and read our guide to getting started.

3. AVOID GUESSWORK

Brands work hard to show a certain image to investors. However, if you would like to invest in a particular share, fund or bond, it’s wise to do some homework so you have a true picture of the company’s strengths and weaknesses. Read our article on researching companies for more information.

4. LOOK TO THE LONG-TERM

Keeping investments for the longer term has been shown to bring better results. You can learn more about why it’s best to ‘buy and hold’ here.

5. EMBRACE DIVERSITY

Diversification can be simplified to: ‘Don’t put all your eggs in one basket’. A portfolio that contains a mix of high and low-risks assets will help protect you against market volatility, while still providing a chance that your money will grow.

6. KEEP A LITTLE CASH TO HAND

Selling investments can take time, so having some cash in your portfolio means you can access money quickly and take advantage of any investment opportunities that come along. Find out why you need a bit of cash in your portfolio here.

7. DON’T SET AND FORGET

Building an investment portfolio isn’t a one-off job. Check your investments regularly to make sure you’re happy with your choices – and on the road to achieving your goals. Read more about how to manage your portfolio effectively here.

8. CONSIDER EXPERT HELP

If you want expert advice you could talk to a professional adviser. You could benefit from their knowledge and experience, as well as their ability to look at the big picture. To help you decide if you want to seek advice or ‘go it alone’, read our article here.

9. WATCH OUT FOR COSTS

As an investor, you can expect to pay fees along the way. These charges – often a percentage of how much you’re investing – might seem low, but they can add up. Read our article to discover how you can keep on top of costs.

10. CHECK YOUR TAX

Depending on how well your investments perform, you may need to pay tax. You can protect your profits from capital gains tax and dividend tax by using tax wrappers such as ISAs and other legal tax-efficient methods. Learn about Stocks and Shares ISAs here.