Eleven Essential Tips for First-Time Investors - Oury Clark (2024)

1. Be honest about the type of investor you are

Any good financial advisor will sit down with you and profile your tolerance for risk, but it’s important that you establish from the start your boundaries. Are you a steady Eddie, or are you prepared to chase high returns with higher risk? Think about how you’ll feel if your investments plummet, or if a great year is followed by a not so great one. Recognising who you are and what you’re prepared to do should be the first step you take.

2. Make some plans

“A goal without a plan is just a wish” – financial advice writers love to reach for quotes like that. Mainly because they’re true. Before you get cracking, you’ll want to consider key questions like ‘How much do I want to invest?’ and ‘What’s the end goal of my investing?’. With a solid plan, everything you do afterwards will flow much more smoothly, and you won’t be sidetracked by distractions.

3. Don’t ignore your tax position

If you’ve got enough money to consider investing some of it, chances are that doing so can also impact on your tax burden. Get yourself clued up in regards to using your tax allowance, investing in tax-efficient areas and what the future holds. This is an area where professional advice at an early stage can pay dividends – just gently used an investment pun there – in the long term.

4. Don’t run before you can walk

The one about ‘tiny acorns’ should go here, because it’s also true. Stay clear of investing all your money before you have a clear picture of your plan, your attitude to investments going down as well as up. In other words, start small and develop your portfolio gradually, something that can be especially beneficial when the market is a bit choppy.

5. Take your sweet time

Person invests money. Global market event reduces the value of that investment very quickly. Person panics and cashes in their investment, taking the loss. Investment then recovers for everyone who stayed the course. This is a massive simplification, but the lesson is that investments should be for the long term, and a first-timer needs to be prepared for the ebb and flow of the money markets. Keep your long-term plan in mind and don’t panic.

6. Invest with a broad mind

Investing is complicated and subject to rapid changes that you might not have planned for. Not everything can be foreseen, so it’s recommended that you keep a diverse investment portfolio. A downturn in one area can be offset by an uptick in another. It helps you to take bad news on the chin, but also take advantage of more areas. No, we’re not doing the ‘eggs in one basket’ one. You can’t make us.

7. Keep reassessing your investments

There’s no time to be blase about your investments. Never take your eyes off the ball – or make sure your investment advisor is earning their keep. You’ll want to see what areas are performing well, and what has underperformed consistently. Revise your investments according to your initial plan. This is vital when, for example, you’re investing for your retirement and that day is about to come. At that stage, would you want your investments exposed to high-risk markets?

8. Learn to roll with the punches

The boilerplate you see on all investment advice – look, there’s some on this page – warns you that investments can go down. The chance of increased returns through active investment always comes with increased risk. Again, be prepared to take some small term hits – if you’ve followed all the other advice so far (and you really should) your portfolio should be diverse enough to wear a few punches on the chin.

9. Set yourself a time limit, but stay flexible

It doesn’t matter what your plan is, do your best to stick to it. If you’ve decided you want to close your investments at a certain time, such as at retirement, or when they reach a certain level, it’s generally best to follow through. It can be easy to get distracted, to think you’ll just stick it out a bit longer, and then the market can dip and scupper your plans. Equally, that doesn’t mean being rigid – stay limber, look at the big picture and see if the current conditions fit your plan.

10. Tap into expert financial investment advice

Not everyone can be an expert on assessing their tax position or the best way to achieve a diverse portfolio that accurately reflects your attitude to risk. And a guide to investing such as this one can only go so far. This is why it’s so vital to get expert investment advice from professionals who can see the big picture and can guide you through the pitfalls. The earlier you get someone on your side, the better. Speaking of which…

11. Don’t wait. Start now.

Interest rates are rising? It happens, but it’s still unlikely they’ll come close to matching inflation rates, so the longer you leave it to invest, the less your cash is worth. The best time to invest is always ‘right now’, so you can put in the legwork and prep – that’s the other 10 tips above’- and then look to make your money work for you, rather than just dwindle. Still haven’t filled your investment bingo card? No risk, no reward. Too big to fail. Speculate to accumulate. Full house!