Are you ready to become an investor?
The world of investing can seem a bit... intimidating. It’s easy to think it’s only for a certain type of person: someone with a spare yacht and a subscription to a financial newspaper. But that’s not the case at all.
In reality, anyone can be an investor, and you can start small – with as little as £1. But before you take the plunge, it’s worth getting a handle on a few things. Let’s tackle some of the common barriers that stop people from investing, and then look at a quick checklist to help you get started.
Think you're not rich enough?
This is probably the biggest myth of all. The truth is, many people probably have enough to start investing, even if it’s just a small amount each month. We're all familiar with that feeling of watching our cash sit there, not really doing anything, while everything else seems to get more expensive. Investing is about setting aside a portion of money in the hope that it’ll begin to work for you; beating inflation through long-term returns and the magic of compounding (that’s when your investments start to earn you money – it’s the returns you earn on the returns you’ve already made and reinvested).
Think you're not smart enough?
You don’t need a masters degree to become an investor, but there’s a lot of jargon and confusing language in the world of finance. It can be a lot, we get it. That’s why we always break down the basics and cover the important topics in bite-sized chunks that are quick to read and simple to understand.
Our investment options are easy to explore – there’s no endless list of funds to scroll through, and you can keep it simple and pick from a ready-made fund or build your own portfolio from the full range of themed and geographic funds.
Worried about the risk?
This is a big one, and it’s completely normal to feel this way. Investing always involves some level of risk. But it’s worth noting that, in the long term, investing can usually help your money grow more than just saving. While the value of your investments can go down as well as up, the markets you can invest in have generally risen over time.
Being risk-averse doesn’t mean you can’t be an investor, it just means you need to find the right level of risk for you. We help you out by adding risk ratings to all our funds, or you can choose a ready-made option that’s either Careful, Balanced or Adventurous.
A good place to start is by thinking about how you’d feel if your investment suddenly went drastically down in value. Would you be prepared? Would you feel calm enough to ride it out?
Your pre-investing checklist
So, with the hurdles out of the way, here’s a quick checklist to help you decide if you’re ready to start your investing journey:
Your financial situation: Do you have any high-interest debt that you should clear first? Do you have a financial safety net in place in case something unexpected happens, like a job loss or a broken boiler? Getting these things sorted out is a great first step before investing.
Your relationship with risk: How do you genuinely feel about the possibility of your money going up and down in value? You need to be prepared for the dips as well as the climbs.
Understanding the small print: Do you understand the fees involved with investing? And the terms and conditions?
Ready to get started?
Becoming an investor doesn’t mean you have to change who you are or become a financial wizard. There are no magic tricks or secret codes here. Just a simple, clear and easy way to start putting your money to work. And you can start small, with as little as £1. Read more in our beginner's guide to investing.
If you’re ready, you can check out investing at Monzo.
The value of your investment can go up and down and you could get back less than you put in. Monzo current account required. UK residents 18+. Ts&Cs apply.