In recent years investing has become much more mainstream due to the availability of investing apps. Anyone can download an app and start investing, but where should you start and what should you invest in?
What is investing?
Investing is simply putting your money somewhere with the hope that it’ll go up in value.
For example if you bought a gold bar for £100, in 6 months time that same gold bar might be worth £150, meaning you have made £50. You can do the same with stocks/shares in a business.
Why not just put my money in the bank?
Most banks will offer around 2% or 3%, these will be for easy access bank accounts where you can easily add and withdraw money.
This means that you will gain (for example) 3% interest per year. If you have £1000 in the bank, they will give £30 just for having your money in there bank.
Some banks offer interest rates of around 3% – 3.5%. Others above 4%, I’ve seen some offer around 7% but money of these require you to keep your money in the bank for at least a year and you can’t withdraw it.
These numbers are based around the Bank of England offcial bank rate which moves around every money. You view it here.
All banks will use this number to change there interest rates, it will affect mortages, loans, and other things money related.
You could put your money in the bank and get a guarenteed 3 or 5 or even 7% each year but the stock market can earn you more money.
If you was to invest in the S&P 500 which is the top 500 companies in the world, you can expect a return of around 10-11% (Source IG.com).
Average returns per year for the S&P 500
If you was to invest in the S&P 500 you could lose money, but historically it always goes up. In the last 20 years its gone up 679.1% in the last 10 years its gone up 272.2%, in the last 5 years its gone up by 80.2%. (Source https://curvo.eu/backtest/en/market-index/sp-500?currency=eur)
Meaning if you invested £1000 20 years ago in the S&P 500 you would now have £7,791.
So it makes more sense to invest your money, or at least some of it in the stock market to beat the banks interest rates.
| Period | Average annualised return | Total return |
|---|---|---|
| Last year | 10.8% | 10.8% |
| Last 5 years | 12.5% | 80.2% |
| Last 10 years | 14.0% | 272.2% |
| Last 20 years | 10.8% | 679.1% |
Where should I start investing?
There’s lots of routes you can go with this. I would advise picking one app and sticking with it for a while.
Everything I write below is my opinion and you should 100% do you own research.
Trading 212
This is a good place to start, they make it easy to set up and account and start investing. When you start make sure you pick the option “Invest” rather than CFD, you don’t want to get into the realm of Day Trading. We’ll cover this at a later date.
There’s fees are very low and often zero and you can invest in a large number of things including commodities like gold, as well as stocks like Apple or Intel as well as ETFs like Vanguard S&P 500.
If you ask me, the safest investment you can make is an ETF, which is basically lots of stocks put into one investment, the S&P 500 is one of them. You’ll often them see them called something like “Vanguard S&P 500” which just means Vanguard manages this ETF.
You are welcome to invest in actual companies, but only do this if you are ok with potential losing your money.
Wealthify
This is another easy to use investing app, you can set up a one off payment or a monthly payment and then set up the “risk”, the higher the risk the higher the potential reward as well as the risk of losing money.
A great thing about this app is that you can choose the “theme” of investment like “ethical” or “orginal”. With this app you can kind of stay away from having to make any decisions and they do the rest for you.
EToro
Similar to Trading 212, you sign up and pick the stocks you want to invest in. They have kind of turned this platform into a social media for investing, stocks have a feed of people commenting on this and you can “copy traders” investment to make things easier.
InvestEngine
A great platform that is a bit more aimed towards more experienced investors but you can definatly make this your first investment app.
Very easy to use and keep track of your investments. I tested out this platform recently by putting £2000 into the Vanguard S&P 500, it went up by £130, then I withdrew my funds of £2130. It was a great little bit of income from doing nothing really. No fees.
I intent to put more money into it in the future.
Vanguard UK
I’ve mentioned these a few times, they have their own platform and App where you can invest in various funds. I’ve used them for a number of years and I’ve made a good amount of profit from my investments.
Summarising Starting Investing
I havent gone into too much detail here but those are the platforms that I have personally used. I’ll go into much more detail in later posts.
To summarise, you should really look into investing any spare money in the stock market in some way, as it’s a good way to earn more money without really having to do anything. Of course you can very easily lose money so be careful when you invest in anyway.
