5 things to consider before you start investing

Feeling like you don’t know where to start when it comes to investing? Don’t worry we got you.

You might be confused about when the right time to start investing is for you, but the reality is that there is no such thing as the perfect time to start. There are, however, some things you should consider before you start your investing journey. Read on to find out more.

1. Have a clear view of your finances


Having a view of your money, not only gives you greater control, but you will also have a clear understanding on what money you can afford to put towards investing.

A good way to achieve this is by setting up a budget. Start by making a list of all of your sources of income and do the same with your outgoings.

Once you see what money you have left over after this, you can then decide how much you want to put into savings and the amount you might be able to afford to start investing with.

There are lots of free tools and apps out there that can help, but old-fashioned pen and paper works a treat too!


2. Take a look at your debts


If you have any high-cost debts (things like credit cards, buy-now-pay-later balances, and personal loans) you should try to pay these off before you start investing. The amount you pay in interest for these debts is likely to be far greater than the interest you will receive from your investments, so it’s worth clearing these as soon as you can first!


3. Set up an emergency fund


The money you invest should never be money that you are planning to use in an emergency or for the short-term. Making the most of investing may be over several years, or short fixed time, although there are other factors that must be considered, as well as duration.

You should, therefore, have some savings set aside which you can quickly and easily access to pay unexpected bills – for example, your washing machine breaks down, or your car needs fixing. Ultimately, the size of your emergency fund is up to you but having one in place must be a priority before you start investing.

If you have dependents, it might also be worth thinking about further protection beyond just an emergency fund in the case of a significant life event. This could include life insurance, accident cover and/or income protection.


4. Think about your goals


The amount you should invest depends on your financial situation, investment goal and when you need to reach it. One common investment goal is retirement. A general rule is to invest around 10-15% of your income each year for retirement. That may sound daunting now, but you can start small and work your way up to it over time.

If you live in the UK and are in employment, you are probably already auto enrolled into your workplace pension from your employer, and so your first investing milestone may be to contribute at least enough towards your workplace pension to earn the full match. This is money your employer is giving you, so you maybe don’t want to miss out on it.

For other investing goals, such as buying a house, travelling the world, or your future children, consider your time horizon and the amount you need for that goal, then work backwards to break that amount down into a total that you put towards investing each month.

5. Determine your risk appetite


With investing, it’s broadly accepted that with more risk, comes greater potential of reward. How much risk you are willing to take on will depend on your goals and how long you have to achieve them. In general, the longer you give yourself to invest for a goal, the more risk you are able to take on as there’s more time to ride out the ups and downs that naturally occur in the stock market. That’s also why it’s probably a good idea to start investing as soon as you can.


With our Wealth8 app, we make this simple for you as you can easily choose between a range of investment funds based on your values and risk level.


Once you’re all set with the above, you’re probably in a good position to start investing. You don’t need a lot of money to start, and it might be a good idea to start small to get you comfortable with how it all works.


This article should not be read as personal financial advice. Individual investors should make their own decisions or seek independent advice.


Capital at risk. As with all investing, the value of your investments can go down as well as up. This information does not constitute advice nor a recommendation. You should consider your own personal circumstances when making investment decisions. If you are unsure how to proceed, you should seek professional independent advice as to the suitability/appropriateness of any investment for your individual circumstances or needs.


The good news is you can start investing with as little as £8 with our app!


Download the Wealth8 app now.