Now’s the time to learn more about where your money is going.
Due to the risks associated with investing, you have to be over eighteen to start. That doesn’t mean you can’t still get involved at a younger age. Ask your parents for help identifying the options that are available to you at your age. If they’re already saving or investing on your behalf, then
great, you’ve got a headstart!
If you’re starting from scratch, then you have a blank canvas! What are some of your goals? Where would you like to invest in the future? When would you like to begin? Start putting together a little plan and doing your research so as soon as the time is right, you’re ready to go!
I hope by now you’re beginning to be interested in starting your own investment portfolio when the time is right – your personal, diversified collection of all your assets. Before you begin, here is a checklist to consider.
Pre-investing checklist:
1) Understanding of what you are investing in and the risks
Ever heard the expression “knowledge is power?” Well, there are few places it could be more powerful than when it comes to your cash. One thing we’re absolutely not going to do is start putting our money into things we don’t understand. If having a Royal Money Mindset means being in control of our cash, well, this is the opposite of that.
2) Capacity for risk
OK, so now you understand what you’re investing in, can you afford to take on the risks associated with choosing that investment? Or, in other words, if the investment went up in smoke, completely taking all of your money with it, how much would this compromise how you currently live? If making this investment would make your financial foundations wobbly, then that’s a good reason to think again, at least temporarily.
“When women do invest, we smash it—trust yourself!”
3) Risk appetite
Are you someone that finds comfort in certainty (or as close to certainty as possible), or do you prefer the excitement of the unknown? Knowing how you respond to unpredictability is a key factor in deciding when and where to invest your money. The last thing you want to do is invest in something that will give you sleepless nights with worry.
4) What matters most to you
Do you have strong values or ethics that influence how you live your life on a day-to-day basis? If so, your investments should reflect that. Perhaps you’d prefer to invest only in green companies or those that don’t sell tobacco or alcohol. Whatever it is, be clear on your guiding principles and make sure your investments match.
5) Investment objective
Knowing whether you’re investing for a specific goal, to be realised within a specific timeframe, vs having a more general goal to grow your cash for an undefined point in the future could help narrow down which investments are right for you. Being clear on this early is a real Royal move.
So now you have an idea of what investing is all about and some of the considerations you need to make before you build your own winning portfolio! Here’s a recap of some of the key things to remember.
1. Cash saving and stock-market investing are distinct but important parts of a well-managed financial plan.
2. Inflation is a silent assassin when it comes to your cash and could mean that the value of your money over time is depleted. Keep track of this if your money is held in a savings account.
3. Investing is a great way to grow your money, but you must understand the risks.
4. When women do invest, we smash it—trust yourself!
5. Diversification is your secret weapon when it comes to trying to maximise how much you can grow your money without putting it in danger of being lost due to excessive risk.
Cash Is Queen: A Girl’s Guide to Securing, Spending and Stashing Cash by Davinia Tomlinson is published by The Quarto Group and out on 5th January.