Tips for beginner investors

It’s easy to find the world of stocks, mutual funds and property investment intimidating, but the sooner you start investing, the greater your ultimate benefit. Here are some common questions new investors ask.

Where do I start with investments? First decide what you want to achieve. Are you saving for a specific shortterm goal, such as a deposit for your first home or a new car? Or are you saving for the long term, to fund your retirement? Your answers will largely determine how and where you invest.

How much risk should I take? The shorter your timescale, the fewer risks you can afford to take. Avoid putting money that you may need in the next few years into the stock market, as you may need enough time to recover from a sudden drop in the market. If investing for at least five, ten, 15 years or longer, then consider putting some money into stocks and shares, as they should deliver greater returns in the longer run. Which shares should I invest in? Buying individual company stocks is too risky for most ordinary people. Even big household names can perform poorly. Most people should start with a managed fund investing in a mix of 30 or more different companies to spread your risk.

What does diversification mean? Diversifying your portfolio means spreading your money between different assets, sectors (agriculture, construction, mining, etc) and parts of the world. For example, you should keep some funds in an instant-access savings account for emergencies, and spread the rest of your portfolio between shares, bonds, property

and even some gold.

How often should I review my portfolio? You should check once a year, to see how well it is performing and whether you are investing in the right places. But resist the temptation to tinker: investing is a long-term business and constant juggling can backfire.