New to investing? Here’s all you need to know to get started

Emily Mee, 27, a freelance lifestyle and culture writer, saves £200 a month after outgoings. She wants her money to have the best chance of growth for a house deposit. 

“I currently use an easy-access, fixed-rate savings account. I want to know how to get started with investing,” says Mee, who also has some inheritance in savings and a Lifetime ISA.

Emma, a financial expert from Lloyds, says the first step for anyone thinking about investing is to make sure they have at least three months’ income set aside in an easy-access savings account in case of emergencies. Emma says Mee is in a great position to move ahead with investing, because she already has this buffer in place. 

Helping your money grow

According to Emma, if your priority is building up some easy-access savings, then you could go for a cash savings account or a cash ISA, both of which pay interest on your savings. If you’ve got this covered, then it’s time to start thinking about the longer term and investing in the stock market. In reality, doing a bit of both is best, because most of us need to balance our short-term goals and long-term needs.

“If growing your money for the future is your goal, then it’s important to understand the difference between cash savings products and investing,” adds Emma. “Typically, cash provides lower returns than the stock market in the long run, and inflation reduces the buying power of money over time.”

Emma suggests Mee should think about the time period she’s got in mind before deciding where to put her money: if she wants to be on the property ladder in the next couple of years, investing may not be right because she will want to access the money sooner, but if she is happy to wait then investing could be a better option. “Ideally, you want your money invested for at least five to 10 years to help even out the ups and downs and give your money time to grow,’’ explains Emma.

Getting started with investing 

“Forget the myth that you need to have tonnes of money and experience to invest. There are so many products on offer now which make it easy and affordable to start,” says Emma. 

If you’ve never invested before, or don’t feel confident to pick your own options in which to invest, then consider a ready-made investment.

Emma explains: “With Lloyds Ready-Made Investments, experts build and manage everything, so you don’t have to. There are three options to pick from (depending on the level of risk you are comfortable in taking), and you can start with £50 a month or a lump sum of £500.”

Don’t let the word ‘risk’ put you off 

“Deciding the level of risk you are happy with depends how you feel about market volatility,” says Emma.

With Lloyds Ready-Made Investments, you choose an option from low, medium or high risk (cautious, balanced or progressive).

Investments fluctuate, which is why you should consider investing for the long term (five or more years), because it gives you a better chance to smooth out any ups and downs. Higher risk just means higher volatility, but if you can leave your money alone, this can mean greater returns. 

A more hands-on approach 

If you want to have a more hands-on approach to picking your own options to invest in, then consider a Stocks and Shares ISA. Lloyds offers both ready-made investments and stocks and shares products with flat-rate account fees, which are great because your fee will be the same no matter what, even if your investment grows. You can keep track of your investments on the mobile app too, which Emma says lots of customers find really useful – because they are able to see their money all in one place.

“The benefit of an ISA is that any growth will be tax efficient. You can open and pay into more than one, but the maximum you can invest in any tax year is £20,000,” adds Emma. “If you have more than that to invest – maybe from an inheritance, like Mee – or if you’ve saved up to your annual allowance already, you could explore using a pension (which would also be tax efficient) or a general investment account.” 

Taking the next step 

“The key is to diversify,” suggests Emma. “She has savings, and some inheritance, so is in a good position to do more. Cash accounts alone won’t help reap the same rewards. Over the longer term, your wealth could grow faster with investing,” she says. 

Lloyds Ready-Made Investments are available to Lloyds Internet Banking customers.

For more information search Lloyds Ways to Invest, where you can read more about their Ready-Made Investments and Stocks and Shares ISA.

The value of investments and the income from them can fall as well as rise, and you may get back less than you invest. Tax treatment depends on individual circumstances and may be subject to change in the future. Fees and charges apply.