What you need to know before starting to invest

In this guide we’re going to cover everything from whether you even should invest, to how much, and for how long.

How do I know if I should start investing?

Whether or not you should start to invest your money depends on your personal circumstances, whether you can afford it and what you’re aiming to achieve by investing. The best way to understand if investing is right for you is to speak to a professional who can review all of your finances and recommend a personalised plan. You might be thinking ‘that sounds expensive’ and, traditionally, it is. However, that’s actually why we exist.

We believe everyone should have access to financial advice so they can make the best decisions about their money, so we launched our free ‘financial health check’ service. As part of the health check, we’ll ask a few questions about your financial situation such as your income, outgoings, debts and attitude to risk.

This information helps ensure we get a true picture of your circumstances so we can give you the best recommendation, even if that is that you shouldn’t be investing yet. We’ve detailed why we might not recommend investing here

What should I consider before starting to invest?

What do I need to do before I can invest?

Before you start to invest, you need to have a clear plan in mind for what you want to achieve, how much you want to contribute each month and how comfortable you are with risk. This is so you’re able to get on the right investment plan to suit your needs.

You also need to make sure you have three months outgoings in accessible savings, to act as a cash buffer for life’s emergencies. Investing is for the medium to long term (at least 5 years), and so having a cash buffer to draw on will take some of the worry out of seeing your investments rise and fall in the short term.

How much should I invest?

How much money you decide to invest depends on what your investment goals are and what your current financial situation is. With some online investment platforms such as ours, you can invest anything from £1 so there really is no amount too small.

When you join OpenMoney, our dedicated financial advisers are on hand to help you make the right choices on your investment journey. We can advise you on how to best manage and grow your money to achieve your goals, and we won’t recommend investing unless it’s right for your current circumstances.

How long should I invest for?

There’s no right or wrong answer here, but broadly speaking, investing your money should be a medium to long term commitment. We recommend that you invest for at least 5 years without dipping into or withdrawing your funds..

Any shorter than that, and you may be better off leaving your funds in cash savings where they will be easily accessible and won’t be subject to short term market fluctuations. Don’t worry though, if something unexpected happens and you need access to your funds, here at OpenMoney we don’t have a minimum term, so you’re never locked-in..

Of course, the longer you can invest for, the better. Your funds will have more potential to grow, benefit from the magic of compound interest and will have a better chance at riding out any market fluctuations that might occur.

How much will it cost me to invest?

All investments come with costs. They are usually in the form of annual fees, calculated as a percentage of the total amount you have invested. Some investments are far more expensive than others, and can include management charges, administration charges, platform fees, entry and exit fees, and advice fees. These charges can really stack up.

We have no up-front costs, so you keep more of the money you invest from day one. Furthermore, our charges are capped at no more than 0.51% a year, whereas a traditional financial adviser might charge more like 1.5%. This means, if you had £10,000 to invest, after 10 years you would have saved £990 in fees with OpenMoney, compared to a traditional adviser. Our fees are charged monthly, based on the value of your investment across the month, making payments easy to manage.

How can I start investing?

If you want to start to invest, take our financial health check and we will be able to review your circumstances and make a recommendation that is right for you.

Is it a good idea to transfer your investments so they’re all with one provider?

Remember, capital is always at risk when investing.
Fees correct as of 20/04/2022 and may exceed the stated value.

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Capital at risk

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