There’s a lack of willingness to invest among the general population in the UK, with only 12% of Brits known to have invested in the stock market as recently as 2018.
This is despite the fact that investing in stocks and shares can deliver higher returns than cash in 90% of cases, which means that we either lack the knowledge to invest or the means to do so on a regular basis.
The failure to invest is probably caused by a combination of these factors, but what steps can be taken to overcome this impasse? Let’s find out!
#1. What Are Your Financial Goals?
In order to invest successfully, one of the most important strategic components is to have a clear and concise financial goal in mind.
Make no mistake; the better your understanding of your financial goals, the easier it is to organise your finances effectively and achieve such objectives within a desired timeframe.
But how do you achieve such clarity? Well, we’d recommend conducting a detailed audit of your current finances and precisely how much you can invest within a given timeframe. This helps you to manage risk while pursuing viable returns, while also ensuring that you don’t overcommit yourself or take on too much leverage.
To help in this respect, you may need to liaise with investment management experts. This way, you can fill
any gaps in knowledge that you may have and leverage financial market expertise to your advantage.
#2. Start Investing Early
As most investment vehicles tend to deliver returns over time as yields are compounded and diversified, it makes sense that you should start investing as soon as possible.
Even on a fundamental level, the earlier you start investing, the more significant profits you can achieve over time. This also enables you to manage risk and pursue incremental gains while minimising the risk of loss.
Of course, what may change is the nature of your portfolio and how it is structured over time.
For example, you may invest in higher risk assets such as stocks and forex early on, in order to leverage higher yields and returns. Then, you can gradually look to consolidate such gains, by incorporating more stable assets into your portfolio like dividend stocks and bonds.
#3. Diversify Your Interests
As the latter point highlights, you can structure your returns and minimise your exposure to risk through the gradual process of diversification.
This can apply to many elements of your portfolio too, from diversifying individual assets within a particular niche to reaching out to new asset classes as your income and level of experience grows.
This also encourages regular investment and higher levels of engagement, as you frequently look to rebalance your portfolio to reflect your outlook and the wider market conditions.
Try to avoid over diversifying your portfolio too. This can dilute your returns considerably over time, although your chosen wealth manager can help in this respect.