A General Guide to Investing

1. Build on firm foundations

We believe investing is for the long term, so it makes sense to start with a firm foundation. Before you begin, there are a few things to consider.

Clear any debt

Earning interest on interest helps build long-term returns but, when it comes to debt, the same compounding effect works in reverse, increasing the amount you owe. Where possible, pay off any expensive unsecured debt (eg. credit cards) to ensure your money starts working for you and not someone else.

Cover your expenses

Aim to build up at least three to six months’ salary in easy-to-access savings. This should help to cover unexpected emergency expenses, without dipping into your investments.

Get advice if required

Integra are always here to help.

Maximise pension savings

Take full advantage of employer contributions to a company pension, especially if they match your own.

2. Start with a plan

Knowing what you want from your investments, and how you plan to get there, helps set the course for the rest of your investment choices.

Define your goals

The best long-term investment decisions are based on your own personal financial goals, so establish what you’re investing for and how long you have before you’ll need to access savings.

Get tax-savvy

Make the most of tax-efficient allowances before putting money into other investments. Investing in an ISA means you won’t pay any further income or capital gains tax, whilst a personal pension (SIPP) will benefit from tax relief, meaning the government will top-up your contributions.

Decide how you’ll manage your money

It’s important to consider the pros and cons of an active or passive investment approach. While actively-managed investments benefit from the expertise of a fund manager, passive options (like tracker funds)have lower charges. Combining both within your portfolio could help you achieve goals while keeping an eye on costs.

Set up regular savings

Making monthly contributions into a savings plan can grow into a sizeable nest-egg over time. Plus, you have the flexibility of choosing to invest monthly, quarterly, or just once a year.

Do not delay

Start investing as soon as you can afford to. Remember investments benefit from the magic of compounding over time… the sooner you begin, the better your returns should be.

3. Manage risk

Knowing what level of risk you’re comfortable with will help in choosing a blend of assets that’s right for you. Your attitude to risk is also likely to change over time, so be consistent but flexible in your approach.

Diversify

Asset allocation will have a significant influence on your investment returns over the long term. Spreading your money across different assets (equities, bonds, commodities, property and cash) helps to balance out the ups and downs of the market. One way to diversify your portfolio is to invest in a fund which already invests across a broad range of individual companies and assets.

Remember, holding a lot of funds doesn’t necessarily mean your portfolio is properly diversified. In some cases, fund holdings can overlap, increasing your exposure to a particular company or sector. Actively-managed funds aim to cherry-pick the best options within a given market and holding too many funds could mean you’re following the performance of the overall index, but still paying active management fees.

Keeping a cool head

Always be wary of making investment decisions on a whim, or simply following the herd. Many of our investment journeys are focused on funding the big moments in our lives and so they deserve careful thought and planning.

4. Focus on the long term

Stock markets can be unpredictable and investments perform differently over time. So, it’s important to keep the long term in mind and see beyond short-term peaks and troughs.

Don’t tinker

Try not to monitor your portfolio too frequently or get distracted by the daily performance of individual investments, as focusing on the short term can prompt you to act rashly. Instead, schedule in check-ups at appropriate intervals to make sure your investments still match your attitude to risk and are on course to meet your goals.