How I tried to learn investing, but ended up blagging it

I’ve been investing for six-months now. That sounds more impressive than it actually is. You see I’ve not actually done much. Find out why I just can’t get my head around the terminology and how you can give it a try like me but with minimal effort.

I’m thrown myself out of a helicopter, trusting the instructor will pull the chute. I’ve hurled myself off a bridge with just a wire around my waist. And I’ve braved whitewater rapids on a few occasions. Sounds like someone happy with taking risks yeah?

Well, I like to think so. I rarely go for the safe option – but it’s a different story when it comes to my money.

There are studies that show we’re more likely to fear losses than go for gains, particularly with cash, and it seems I adhere to the statistics. The other week I was unreasonably angry with myself for losing just two quid from my pocket on a run.

It might seem ridiculous to worry about such small change, but I hate the idea that I could lose any money. And this is probably a large part in why I’ve never ventured into the world of investments. It makes me uneasy that I could lose money on the whim of a market. Incredibly uneasy.

Boosting savings

Don’t get me wrong, I don’t have dreams of accumulating enough in an underground vault so I can swim around in it à la Scrooge McDuck. I like to use my savings to live the lifestyle I want, whether that’s travelling or going out for a slap up meal.

Though I do also save for the sake of saving too. I’ve a stash of cash as an emergency fund I can easily access if I need it without paying any penalties, and I regularly put money aside for big events and purchases like holidays and Christmas.

And it’s not that my savings haven’t been making money. They have – just in a way I can control. I’ve always kept money in some kind of cash account. I pride myself on getting the best interest rates I can – my 11 different current accounts attest to this.

Looking for a new savings solution

Since many of these high-interest rates were cut in the new year, my returns have reduced too. Even so, a good spell of saving means I’m close to reaching the peak of my tax-free Personal Savings Allowance (£1,000 a year in interest for a basic rate taxpayer). This means I’ll have to start paying tax on my interest, cutting how much I make above this by 20%.

Plus, my move away from a 9 to 5 into spending more time on my blog and freelance writing means my pension isn’t getting the contribution I know it should be.

So the obvious answer was to look into investing.

My first time investing

Back in March, just before the “ISA deadline” and end of the financial year, I began to try and understand just what the hell was going on with investing.

Now, I came at this with a starting knowledge of just slightly more than nothing. I avidly read the money pages of newspapers, but I idly flick over the investing pages. I was essentially a complete beginner, most of my knowledge based on what I’d seen in popular culture.

And that’s not a good place to start. When you see stock and shares in the movies, it’s all shouting, ego and treachery on Wall Street as good looking people wearing braces shout “buy” or “sell” into phones and each other.

Or we get bland real-life stories about men sitting in front of computers sexed up with all-star casts (Ewan McGregor playing Nick Leason in Rogue Trader a prime example). The silver screen doesn’t actually tell you what investing is all about, and glosses over the fact that other than the words “stocks” and “shares” it’s a whole new financial vocabulary.

I didn’t find it easy to understand these new concepts. ETFs, robo-advisers and indexes were among the new terms to me, and the jargon list goes on. I thought I could read a quick guide to get started, but it took forever to even find a decent explanation of what a platform was. There’s a lot to take in. And to be honest a lot of it just didn’t make sense.

And I expect that’s probably where a lot of you decide it’s not worth the hassle. But rather than give up, I did decide to dip my toes in the water, even though I wasn’t completely clear about lots of the terminology. And bit by bit it’s become slightly clearer.

So if you want to give investing a try but don’t want to spend too much time and brainpower on it, I’ve six basics to help you get going.

1. You don’t have to understand investing to try it

Right, you know that “robo-adviser” term I didn’t understand? Well it’s basically a fully automated way to invest, using algorithms to follow the markets (or something like that anyway). This means you just choose the level of risk you want for your investment, and leave it be. There’s no buying and no selling. No need to dig any deeper into FTSEs and Dows. My life can go on.

This is what I opted for back in March. I decided to go with a lump sum deposit into a Stocks and Shares ISA from robo-advisers Nutmeg. And I’ve not done anything else since!

As I understand more about investing, this form of investing seems much more suited to me than getting fully involved. Maybe one day I’ll move onto the next step, but I’ve decided to just stick with what I’ve got right now.

2. You don’t need lots of money to invest

The idea that you need thousands of pounds to invest is a myth. You can start off with as little as £10 a month with some providers.

However don’t jump straight in with all your savings. I’d recommend having some money in cash savings before investing. Not just so you can get it if you need it, but also because you can get up to a guaranteed 5% from many regular savings accounts or current accounts.

3. You should look for the lowest fees

A few months after I opened by ISA, there was some big news which seemed to get the investing world excited. A company called Vanguard launched its own direct to customer offer (you previously could only use them via another investment “platform” company). The difference to other investing options was the promise of very low fees. And even with small investments the fees can make a huge difference.

When I took out my ISA, my choice of Nutmeg was largely down to a cashback offer of £170 from Topcashback – in my head this money mitigated some of the risk. But now I know a little more, and now the Vanguard offer is available, I’d make sure that the fees are low before looking at any cashback options.

P.S. definitely don’t invest just for cashback!

4. Put it in an ISA wrapper

Long-term readers will know I’ve said the ISA is dead. Well technically I said the Cash ISA is dead. If you’re investing you should be looking to put your money in a Stocks and Shares ISA. This means any return you make will be tax-free. You can invest up to £20,000 each financial year, so most of you will be fine.

You can also get the Lifetime ISA (or LISA) as a Stocks and Shares ISA, though there aren’t many options right now.

5. Your money is at risk

What comes up, must come down, right? And this really is true with investments. Some of the articles I read even stressed how we’re possibly at the top of the market. Gulp.

Unlike cash savings, there’s the potential to end up with less than you put in. Now, hopefully the opposite is true and you actually end up with far more money. But even so don’t, whatever you do, invest money you really can’t afford to lose.

6. You need to leave that money there

Every now and then I check my Nutmeg app to see how my money is going. Well, six months into my first investment the little graph looks like a mountain range. At one point in the first month I was down 2%, the lowest point of a foreboding six-day canyon. Not the best start for my confidence!

It’s since rallied and currently sits at 1.72% above my initial investment. That doesn’t sound too impressive, does it? But the idea is not to look at short-term gains – or even worry about what is happening to the money.

Experts say you want to invest for at least five years, so I’ll be doing just that – if not longer.

I hope this article has helped you get over your investing fears. You’ll at least know you’re not the only one who just doesn’t get it!


6 thoughts on “How I tried to learn investing, but ended up blagging it

  1. Good article.

    I started investing myself about 18 months ago, although I started learning about it at least a couple of years prior to that.

    What I have learnt most is not to “over trade”, I have now overcome the urge to trade everytime my investments go up, to capitalise on the gain or go down, to limit my loses.
    You can lose a lot in transaction fees and longer term growth by doing that.
    Now, I smile when my investments go down, because I put away money monthly I see any sale as the share or fund going on “sale”. Good investments always comeback up, that’s why Warren Buffet’s favourite holding period is “Forever”.
    My total investments were up 14.5% over 12 months and 22.2% over 18 months (Mar 16 – Sep 17).
    I’m not bragging, just sharing my experience and this is probably more likely due to the market being at a record high point than my share or fund picking skills.
    I’d be interested in reading your updates every 6 to 12 months to hear more about your experience.

    1. This all sounds great. A great return too!

  2. We’re seeing that women especially seem to be wary investing their money in the stock market. Yes there are risks and it does seem that it’s totally run by men in suits. BUT we all need to save for our retirement and investing (over the long term) is generally thought to be a good option. So ladies, get on with it!

  3. Hi Andy,

    Nice article.

    If your readers want to know more about investing they could always head over to my award-winning blog – 7 Circles. I have everything they need.

    We need more people to start thinking about saving and investing f or the future.



  4. Good for you in having the courage to get started – it’s a big leap, isn’t it?
    Buy and hold investing (ie sticking your money somewhere and leaving it) is actually a great strategy so your money doesn’t get eaten away by the costs of buying and selling, though it’s still important to check the progress of your investments from time to time. Claim your “not doing anything since” as a deliberate choice!

  5. Ah I remember when I started investing it was 2008, there was a run on this little bank called northern rock, all the banking stocks from big companies like royal bank of Scotland were down around 20%. Great time to buy thought I, obviously the panic was overdone, banks weren’t going to be nationalised etc etc. At the worst point I must have been ‘down’ nearly 40% but you know what. I didn’t panic, I think I was back in the black by 2010 I believe, and ahead of just putting it in savings by 2012 at the latest.
    Was it ideal? No but I know pretty well my attitude to risk and quite a lot of gotchas when it comes to owning shares now.

    One tip I would give you is only check your valuation annually. Its very easy to watch the little line go up and down, its very easy to see your portfolio losing £x one day and extrapolate that over a year and worry you’ll be broke. Or conversely plan retirement on the basis of one weeks return.

    The suggestion of nutmeg is quite good and have money invested there myself although I think I will move it on probably to vanguard.
    I started off selecting individual stocks and share, the stock selection and buying was ok, for me it was choosing when to sell. I liquidated my assets when I bought my house, but since I’ve restarted I’ve just been investing 1/3rd each emerging market, global allshare, uk allshare trackers, same for my pension.

    Wrapping up this essay, have you looked into a sipp for a pension? There’s the obvious tax advantages but also ni savings If your self employed? Salary sacrifice etc. A 20%,30% (40%?) bonus is hard to beat.

    Ps I recommend monevator for your investing education. Well written, straight forward blog.


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