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Investing for beginners

It doesn’t matter if you’re about to buy your first share or pick a stock market fund for the first time, always ask yourself WHY you’re looking to invest.

Over the long run, historically stocks and shares have outperformed money in savings accounts.

But that’s no guarantee they’ll do so in future. It’s all about your personal circumstances. For example, you might be one of the many who have despaired at the rotten rates on offer in savings accounts and are prepared to take a risk in the hunt for bigger returns.

Or you may have drawn up a well-researched plan to save £10,000 over the next decade to help pay for your children’s school fees. In both these cases, it’s a clear green light to go and invest.

Be careful if somebody offers you advice

If a friend has suggested a share tip in the pub, or a family member or friend has suggested you “bung a few quid” into a hot share or fund that is currently – in industry jargon – “shooting the lights out”, it’s probably best to think twice unless you’ve money to spare that you can afford to lose.

Take a good, honest look at your finances 

If you’re struggling to keep up with credit card payments, say, or have taken on an expensive remortgage and have little savings, it’s time to step back and think again.

This might sound like basic housekeeping, but the lure of quick gains in the stock market can prevent many people from seeing how dire their overall financial situation might be.

If this is you, far better to try to sort out your personal debts than turn the risk of making them far worse: see our Debt Help guides. Or if on reflection a savings account would be a far better home for your money, see our guides to putting money away in a cash ISA or top savings account.

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