Check Your Risk Profile
Now that you have chosen a platform, an account (probably an ISA) and a fund, all that’s left to do is to press the button. Just one more thing before you do, though. Your risk profile is something which we should mention and which should be borne in mind.
The thing is, as a new investor, your risk profile, that is, the level of risk you’re likely to be comfortable with, isn’t really established yet. One way to get an initial feel for this is to do an online risk profile questionnaire.
You can find one here – this is paid-for (about £30) but that means it’s properly robust and independent. You could try the free Beam app, which is unfortunately iOS only, and that’ll give you some idea of what your risk tolerance might be.
But really, you’re going to need to suck it and see. If you are investing money, you’re not going to need for the foreseeable future, then you should invest aggressively – holding a high proportion of shares. If you’re generally a timid person, then you might want to dial that back.
If you’re not sure, start with a balanced allocation, somewhere around 50-60% in shares and see how you go.
Push the Button
With that checked off, you just have to crack on and get going. Open an account first of all. This will take only a few minutes, but if you fail the ID checks for whatever reason – maybe you’ve moved house recently and aren’t showing on the voters’ roll – then you may have to complete some actual paperwork. But for most of us, you can open an account entirely online.
Now you need to send some money to the account. Start with £100 so you’re sure that the money lands where it should do. Check the bank details and reference numbers carefully so the money doesn’t get misrouted.
When you’re happy that the money is transferring properly, then you can send any lump sum you have or set up a direct debit for monthly savings.
The money will usually sit there in cash until you give your platform instructions on how to invest the cash. Search for your chosen fund, decide how much of the cash you’re going to put into it, and press the button.
It is amazing how you’ll feel when you have done this. Congrats – you’ve made a huge step towards securing your financial future. I understand that for many, this is a big step into the unknown, but rest easy, you’ve done the right thing and won’t regret it.
Set a Date for Three Months Hence
Your next step on the checklist is to do nothing for three months. I suggest that you don’t even check in on your investments at all, though I understand that most of you will!
While it is interesting to see the daily ups and downs, you must understand that it doesn’t matter how your investment performs in the short-term. Checking every day, or even every month, encourages short-term thinking, which is not helpful. Investment is always a long-term game.
So I suggest you put a date in your calendar three months hence and check to see how things are going. Hear me though, you won’t be doing ANYTHING at that point. You’ll be taking zero action on your investment until one year hence.
Review After One Year
At the anniversary of your first investment, you should set aside some time to review things. This episode might help you with that.
Set a date in your calendar and mark it in there now. You could use a memorable date for this, but just make sure that once a year you sit down for an hour – shouldn’t take much longer than that, and as you get used to it, it’ll get quicker.
