Putting It All Together
Congratulations! You’ve reached the final lesson of the course. Over the last ten days, we’ve covered a lot of ground, which I hope has given you the confidence to invest your money. To help you embark on this exciting next step, you can use the following checklist of key questions to ask yourself:
Am I financially stable?
Have I paid off my debts, saved for an emergency, and am I contributing the maximum to my retirement? Any surplus money used for investing needs to be money you can afford to lose. Another way of wording the question would be: Could I still pay the rent and bills if I lose my investment?
When do I need access to the money?
If you need to access the money in less than five years, the stock market may be too volatile as an investment. P2P lending may be more suitable. If you can lock up your money for longer and have a positive impact with your investment, you could invest in 20-year-term ethical bonds.
What’s a good asset allocation for me?
If you’re struggling to start and know that you want to invest in the stock market, consider a broad stock index fund and a broad bond index fund. You can try out the age approach whereby you invest your age as a percentage into a bond index fund and the rest in the stock index fund.
Which provider is most competitive?
If you’re investing a small amount, it’s key to check the fee percentage charged by providers. Use in-depth articles of reputable newspapers that compare ten providers at once to save yourself time. A flat fee is only really competitive if you’re investing more than $100,000.
How much can I commit to investing every month?
Lump sum investing isn’t something to rule out, but if you choose the stock market, you’ll be able to spread the risk of market volatility by investing monthly. Choosing a small monthly commitment is a good way to get used to seeing the ups and downs of your portfolio.
Can I take advantage of any tax breaks?
It’s important to brush up on what tax breaks are available specific to your country. If you or your parents have an accountant, it’s worth setting up a meeting with them to find out ways to make the most of tax-free options.
What should I do next?
The investment options have increased, thanks to our increased connectivity through the internet. I wouldn’t have been able to invest in Vanguard index funds when I was a child because the minimum investment required was $100k. The ever-growing range of new technologies means investing is now more accessible than ever before. So, go forth and invest!
To take full advantage, it’s important to continue reading and learning about your options. My favorite book is The Bogleheads’ Guide to Investing, which I’ve read several times and use as a reference when I rebalance my portfolio. I also regularly read Investopedia, Money Under 30, Mr. Money Mustache, and Money Saving Expert (UK only) to stay up to date on my options.
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