Once you have established your emergency fund and identified your budget, and have chosen how to split your investment amount between accounts, you're ready to push the button. This means that you are going to need to choose a fund in which to invest. My suggestion for most investors is that passive, multi-asset funds are a great place to start.
In a conversation I did with Lars Kroijer on my podcast, he recommends an even simpler approach, opting for a global equity index tracker. I recommend taking a formal risk tolerance assessment. The best place I know to get this done is here.
It'll cost you £30 per head, but don't be cheap. You're about to get started on the lifelong process of wealth building; £30 is a small price to pay for a scientifically robust risk profile. Be wary of free risk profiling tools online; they often have a vested interest.
There are two main ways that you can get started as an investor. Firstly, you can sign up to one of the websites which invest for you depending on your risk profile. They take care of the asset allocation, rebalancing, tweaking investments all that stuff. You just pay in your money, fire and forget. My buddy Damien Fahy over at Money to the Masses has reviews on many of these so-called robo-advisers.
Another quick plug here for a recently launched self-investment platform branded MeaningfulMoney, but provided by my long-time sponsors Seven Investment Management (7IM). This service enables you to determine how much of your lump sum or monthly savings should be invested according to which risk profile.
Then, the system can show you how that blend of risk profiles has performed in the past, and even provide some suggested future possible returns. Find more information about that here.
Or, you can sign up to any online investment platform and choose one of many available multi-asset funds. When it comes to choosing a platform, my good friends at the Lang Cat Consultancy have a free guide to choosing a self-investment platform. It’s simple really:
- Determine your risk profile
- Choose your account
- Choose your provider
- If you’re using an investment platform, where you choose your own funds, you’ll need to choose a fund!
That might seem daunting, but take it a step at a time and you'll be fine. I have a cheat sheet available which will walk you through the steps and provide the links that you need to start things off right.