First-time investors have always faced a number of off-putting factors when deciding what to do with their money – not least the financial risk, confusing jargon and sheer range of options.
On top of that, there is now growing concern over the ethical impact of where you put your money, whether it’s environmental or social. This is our guide for the first-time investor on how to take babysteps into the market and keep your wallet in line with your values at the same time.
Is it the right time to invest?
Before getting started, consider why you want to invest. With interest rates still lingering at low levels, it may be that you want to see more return on your savings.
While stocks and shares can provide better “bang for your buck”, they also provide less certainty and investing should be treated as a long-term activity. If you’re working towards a short-term goal such as putting down a deposit on a house, you may want to wait until you’ve built up the cash you need first, using saving products like the Lifetime Isa to help you.
If you have debts, it also makes more sense to pay these off first before you start trying to make money.
If there are companies which appeal to you, you could use a share-trading service to buy shares in that specific firm. However, this is a risky way of investing as it means your money is tied up in the fate of just a few organisations.
For a less risky and research-intensive approach (which is likely better-suited to first-time investors) you may want to invest in a fund which tracks the performance of a certain index. There are lots of services which will let you do this, often starting from as little as £1.
But if it’s crucial to you that your money is also doing good, new products offering a package of ethical investments might be the answer.
Apps like Oval and MoneyBox let users put away small amounts of money and invest them in stocks which match certain criteria. Trying the process out with just a small amount of money can be a good way to gain confidence with investing.
MoneyBox’s socially responsible fund tracks the MSCI World ESG Leaders Index, which considers environmental, social and governance factors. Newbie investor Mark, a Moneybox user, says: “The availability of the Socially Responsible fund in Moneybox was a key factor for me in starting to invest, as it removes any concerns about supporting organisations with potentially unethical or environmentally damaging business practices.”
Oval offers different pots depending on what factor is most important to you, be it women on the board, LGBT-friendly policies or sustainability.