Decision tree: are you ready to invest?

Everyone’s at a different stage in their financial journey, and that’s totally fine! Whether you’re trying to pay down debt or just feeling overwhelmed by thinking too far ahead, there’s a path that fits you. Yes, investing can be intimidating, but you’ve got to do it – it’s your ticket to building real wealth and making your money work for you.

“An investment in knowledge pays the best interest” — Ben Franklin

Are you ready to invest?

Think you’re ready? A little gut-check never hurts! Before you dive in, take a moment to ask yourself a few questions to make sure you’re feeling confident. It’s all about spending (and investing) with intention, which helps you stay in control of your money. Here are some things to consider…

Learn about strategic bonds

Bonds are generally less risky than stocks, but they’re not completely risk-free. They do offer the chance for capital growth and typically come with a yield that’s higher than a savings account. Strategic bond funds are flexible because they can invest in any type of bond: government, investment grade, high yield, emerging markets—you name it!

Curious about some options? The TwentyFour Dynamic Bond fund currently has a 6.7% yield, while Jupiter Strategic Bond yields 5.1% and GAM Star Credit Opportunities fund is 4.1%.

Discover all Elite Rated strategic bonds

Consider global equities

If you’re up for a little more risk, global equities can be a great way to start investing. They allow you to invest in companies worldwide, giving you the flexibility to tap into various markets like the UK, Europe, or the US.

For example, Guinness Global Innovators, as the name suggests, looks for companies with unique and disruptive ideas. While Capital Group New Perspective fund looks for companies that are able to benefit from transformational changes in the global economy.

Discover all Elite Rated global equities

Read more about why global funds for beginners

Research a multi-asset fund

Multi-asset funds can also be popular with first time investors, as smaller sums of money can be spread across different asset classes, giving some helpful diversification without the added research time. Multi-asset funds are categorised by the amount of equities they can invest in, meaning no matter your tolerance for risk, there’s a fund out there for you.

Find out more about the different types of multi-asset funds

Some examples? VT Momentum Diversified Income is more on the conservative side, while Jupiter Merlin Balanced takes a balanced approach, and Rathbone Strategic Growth focuses on growth with limited ups and downs. For more adventurous investors, IFSL Wise Multi-Asset Growth can invest up to 100% in stocks!

Discover all Elite Rated multi-asset funds

Read more about multi-asset funds as your first investment

Why sometimes the best option is focusing on debt

While starting to invest early is often smart, it’s even more important to make sure it’s financially smart for you right now.

Here’s an example: Say you find an extra £50 a month in your budget and are excited to start investing. But you’ve also got a £2,000 balance on a credit card. At an interest rate of 20.77% (the UK average), paying only the minimum monthly could stretch out your debt for years. Instead, if you used that £50 towards your credit card, you’d clear the balance in two years and save £2,553 in interest! To match that in the stock market, you’d need an extremely high annual return of over 70%, which isn’t realistic.

In this case, it might make sense to tackle that credit card debt first. And while you’re working on that, why not start learning more about investing? That way, in two years, you’ll be ready to make smart moves with your money.

P.S. Once you’re debt-free, investing that full £101 per month could grow to £2,543 in two years with a 5% annual return!**

*Source: Barclaycard repayment calculator
**Source: This is Money savings calculator

Note: this article was originally published 1 September 2021 and updated 30 October 2024