How do I know if investing is for me?

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Heard good things about investing that have you thinking “mmm, is this for me?”. Well, that’s no surprise. There’s lots of love around for investing and its benefits. 

But before you dive into it, it’s worth asking yourself a few questions to help you figure out if now’s the right time for you to start your investing journey – or if you need to focus on a few other things first.

Are you paying off debts?

It’s sensible to prioritise paying off your debts, particularly if you’ve got high-interest debts on things like credit cards or payday loans.

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Focusing on clearing your debts before you invest means you’re minimising unnecessary interest building up, which could otherwise make it even harder to clear your debts overall. Once you’ve paid off any high-interest debts, that frees up more of your money to make investments in the future. 

Everyone’s financial situation is unique so make sure you think about your own situation carefully. 

Do you have 3 months’ savings set aside for emergencies? 

A common question is: should I save or invest? The ideal position is you’re able to do both. But if you have nothing set aside for emergencies and are wondering, is investing a good idea? The answer is probably not just yet.

Unexpected expenses pop up all the time. Things break or stop working, and bills crop up out of nowhere. When these things happen, you might need access to cash quickly.

So think about building an emergency fund that covers 3 months' worth of expenses – rent, bills, food and the like, just in case. This buffer will give you not only financial security, but it’ll offer some much needed reassurance in times of need. It also shields you from the potential risk of dipping into your investments to cover unexpected expenses.

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Remember, investing is for the long term. You want to aim to keep your money invested for at least 5 years to improve your chances of getting the return you’re after. 

Ultimately, an emergency fund acts as a solid foundation for starting your investment journey. Build a savings safety net with Monzo to help you build up 3 months’ worth of expenses.

Would you be comfortable seeing your investment value drop along the way?  

Embracing risk is an important part of investing – the value of your investments can go up and down over the years. That’s why it helps to be patient and see investing as a long-term commitment. 

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If your immediate reaction to seeing your investment’s value fall is to take your money out, perhaps reconsider investing for now. Remember you're in it for the long run. It can be scary when values fall. And of course, they may continue to drop further. But they could rise again too with more time.

Rather than being distracted by occasional dips, as an investor it helps to focus on your long-term goals.

Understand more about the importance of staying calm when your investment value dips.

Ready when you are

Finding the right balance between short-term needs and long-term growth potential is essential to reaching your goals.

So even if investing isn’t for you right now, that doesn’t mean that’ll always be the case. Check on your finances regularly to help you decide whether it feels like the right fit. 

Remember, you can start investing with as little as £1. So we’re ready when you are.

The value of your investments could go up or down and you could get back less than you put in.
This isn’t financial advice. If you’d like some, it’s best to speak to a financial adviser. 

For more help on how to get started and FAQs, visit our Help Centre

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