Jumping headfirst into the world of investing without preparing is a dangerous game. Emma Keywood, senior product manager at Dodl told Express.co.uk her ‘do’s and don’ts’ when it comes to making money through investing.
Don’t: Dip into your savings
“Everyone has a dream about making it big, and if you want to start investing, that dream might involve hitching a ride to a hot cryptocurrency, NFT or stock that you think is heading straight for the moon.
“You should always follow your dream, and even be willing to take a few calculated risks along the way but dipping into your savings isn’t one of those calculated risks.
“Investing shouldn’t involve any situation where you could potentially jeopardise yourself, dipping into any type of saving is a sign of serious financial mismanagement, and assuming you’ve set up an emergency fund, there isn’t any reason that it should happen.”
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Do: Save your money in the best place
“Depending on your investing goals, it might be wise to save your money in an individual saving account, more widely known as an ISA.
“The appeal of ISAs lies in their taxes, or lack thereof – ll UK residents don’t have any obligation to pay tax on the captain gains from investments in an ISA account, or any interest on cash.
“That said, if you’re aiming super high, it’s worth keeping in mind that there’s a limit on how much money a person can put into ISAs each tax year, currently £20,000.
“That doesn’t just mean there’s a £20,000 limit on each ISA that a person might own, it’s a £20,000 limit across all ISAs owned by one person.
Don’t: Have unclear goals
“You should have very clear goals before making any investments.
“Without a plan in mind, your investing will be aimless and misguided.
“Don’t get it twisted, goals can change over a period of time and as you become more experience, but you should have a slightly better idea of what you want to achieve other than becoming a millionaire.
“Also, your long-term goal doesn’t strictly need to be having more money than when you started.
“You can use investing as a means to an end to achieve other feats on your bucket list, like buying a car or visiting a certain country.”
Do: Prioritise your financial wellness
“Looking after your finances also means looking after yourself. Both are linked – your finances impact your mental, physical and social wellbeing and vice versa.
“For instance, prioritising good financial wellness can also boost your mental health as you’ll feel much less stressed.
“Similar to how you might feel inclined to try dieting and increased exercise to maintain your physical wellness, managing your money responsibly is the key to good financial wellness.”
Don’t: Feel like it’s too late for you to start
“There’s no such thing as when you should or shouldn’t begin to invest.
“You can learn to ride a bike at any point in your life, why should investing be any different?
“Many people have turned to investing as a newfound hobby and interest as a result of the ongoing COVID-19 global pandemic, and with enough dedication and discipline, there’s no reason that you can’t be the next person to do so.”