How to start investing
Contrary to popular belief, investing is not just the preserve of the rich, and is accessible to anyone willing to grow their wealth. There is no minimum starting amount in investing, and you can begin with as small as £250, building your capital over time. This guide will give you all the information you need when starting off your investing path.
What is investing
Investing is the act of buying securities such as company shares, fixed-rate bonds, commodities, index funds, and other investment vehicles, expecting their value to grow over time. The goal of investing is to create long-term wealth by building a portfolio that would maximise profits from capital gains and dividends while minimising the risks.
Why should you invest?
Investing is suitable for everyone, whether you have a large amount of capital or are starting with small amounts. The key benefit of investing over keeping money in savings is that the interest rates in banks are at record lows. For instance, the Bank of England’s (BoE) current base rate, which is a benchmark for other lenders, is 0.1%, which means the annual return for every £100 is only 10 pence a year.
Meanwhile, inflation is running ahead of interest rates and eroding the buying power of cash-saving pots. For example, according to the Office for National Statistics (ONS) UK Composite Price Index, prices in 2019 are 150% higher than in 1989, with the real value of the British pound decreasing by 3.1%