Since the dotcom boom of 1999, the London stock market has been a place where many feel they have to tread carefully. But, earlier in 2015, it surged to a 15-year record high and sparked new interest in the idea of trading.
Although the FTSE has dropped since then, experienced financial firms such as IG believe that recent market growth provides ample investment opportunities.
So, if you want to be a part of this economy upsurge, here are 10 tips and tricks to get you started.
1. Look to the long-term
Speak to any financial expert and most will tell you that the greatest gains can be achieved if you commit your money to long-term investments. It often helps to have some future financial objectives in mind when choosing your investments too.
2. Be comfortable with your investment amounts
You might think that only high rollers can invest in the stock market, but most funds will accept monthly deposits of £50 or lump sums between £500 and £1000. This affords you the luxury of only investing amounts of money you are comfortable with.
3. Learn the lessons of the past
Although cash savings might seem like the most sensible option, history has repeatedly shown than long-term equities actually provide better investment opportunities.
4. Make the most of the tax incentives
Did you know that you do not have to pay capital gains tax on any income earned or interest paid on investments made through an ISA? What’s more, you will only pay a flat rate of 10 per cent on any dividends too.
5. Enlist the services of an expert
Regardless of whether it’s an independent financial adviser or renowned financial trading firm, enlisting the services of an industry expert will ensure your wants and needs are always catered for.
6. Spread out your money to mitigate risk
Rather than putting all your money into the shares of just one company, diversify your investment portfolio with different asset classes and with products in different global markets.
7. Consider all of the investment options available
While cash is seen as the least volatile asset class, you could end up losing money in real terms because of inflation. Therefore, consider fixed interest investments, spread betting, CFD trading, or stockbroking.
8. Invest through a collective fund
This is an affordable way to build up various different assets without the burden of making your own investment decisions. Choosing to buy shares directly can be quite expensive, difficult, and risky.
9. Choose the right fund
If you decide to invest through a unit trust or open-ended investment company (OEIC), do some homework as to which one suits your appetite for risk and will best meet your financial goals. Again, look at past performance to see how each one has done over the previous five to seven years.
10. Invest your money on a regular basis
To increase your chances of maximising your returns, continually drip-feed money using a technique call pound-cost averaging. This enables you to buy more shares at cheaper prices when the market is falling.