Top tips for new investors – expert advice | Personal finance | Finance

Many people are often afraid to take the first steps in investing, mainly due to concerns about financial loss. But there are ways to eliminate these fear-based hesitations by investing wisely. With the cost of living soaring, now is the time to do what you can to make your money work. Although it may seem counterintuitive as bills continue to soar; soaring inflation actually offers a good opportunity to start investing, says expert.

Inflation depletes the value of your money and the worst thing you can do is let it devalue in a bank account.

Tom McGillycuddy, co-founder of CIRCA5000said, “By investing, you can protect your savings from this effect and have the money do the work for you.

“It’s important to realize that investing is very rewarding if you stick with it for the long term. This is by no means a get-rich-quick scheme, but rather a clever way to put your money into circulation so that it accumulates over time.”

Investing takes patience, and in the long run, your investments can beat fluctuating economic trends like rising inflation.

Mr McGillycuddy said: “When you follow this approach, impact investing may actually be the best way forward – combining profit and purpose.

READ MORE: How to “Maximize” Returns in a Cost of Living Crisis

“With industries like clean energy and sustainable food booming – and outperforming traditional industry players in the long run – there is no need to achieve competitive returns at the expense of people or the planet.”

Investing can seem risky and knowing where to start can seem complex and daunting to some, so Express.co.uk spoke to former Barclay investment banker Mr McGillycuddy for his top tips to help you start your investment journey.

Think long term

The best way to make money investing is to stick with it for the long term. Generally, five years is a good starting point, but the longer the better.

Mr. McGillcuddy: “Starting early allows compounding to really take effect – getting returns on your returns. For example, if an 18 year old invests £100 in a 5% interest account and does nothing else, he will have £1,043 when he retires at 65.

Setting up investing on autopilot, where a fixed amount will be deducted from your salary each month on investments, will reduce the risk of emotional decision-making and ensure your savings grow steadily with minimal effort.

Diversify your portfolio

It is important not to put all your eggs in one basket. Spreading your money across different countries, companies, industries, and types of investments — such as stocks and stocks, bonds and cash — will reduce your risk if an investment fails.

Mr McGillycuddy said: “It creates a smoother path to returns because when the value of a particular investment fluctuates, your overall finances won’t take a dramatic turn.

“It doesn’t mean buying a lot of different individual stocks in the market. This approach can be expensive (usually around £10 per transaction plus stamp duty) and requires a lot of effort and specialist knowledge.

“A good option for beginners is exchange-traded funds (ETFs), which are a type of fund that lets you buy a basket of stocks that match a set of rules, called the index, rather than have stocks individually selected by a fund manager.

“This not only reduces costs, but is an effective way to diversify your portfolio across different themes and sectors.”

Emergency fund

Once you’ve started investing, it may seem tempting to invest as much of your money as possible in investments to increase your returns and avoid inflation.​​

Mr Mcgillycuddy said: “While investing pays off in the long run, it’s also important to have an emergency fund kept in a bank account so you can withdraw cash if an unexpected cost suddenly arises, like a broken boiler, the loss of your job, or unexpected health care bills.”

Markets fluctuate all the time. Even if a fund is on an upward trajectory overall, there will always be ups and downs.

Mr Mcgillycuddy said: “You don’t want to be surprised that you have to sell your investments when the price of the fund temporarily drops.”

Investing in the companies of the future

Investing in sustainable, positive-impact businesses isn’t just a good thing to do – it’s also a pretty strategic decision that will likely pay off.

Mr McGillycuddy said: “Our focus at CIRCA5000 is impact investing, which means investing in companies that make an active positive contribution to people and the planet.

“Impact investing is just as profitable as traditional investing and often more for two reasons. First, these companies are often better equipped to deal with growing issues such as climate change or regulation around social issues such than gender equality.

“Second, these companies provide innovative solutions to global problems that need to be solved and are therefore well positioned for growth in the future – which means greater returns on your investments as well as a positive impact on the world. “