Transcription
As someone who has been investing for eight years, if I was starting from scratch today, no investments, no portfolio, just a blank slate, here's exactly how I'd do it. I have made my fair share of rookie mistakes when I first started. And if I could go back, I would do some things very, very differently.
So, in this video, I wanted to walk you through the seven key steps I would take if I was starting to invest from scratch today. By the end of this video, you'll know exactly how to a build unshakable confidence as a new investor. B avoid the traps that trip up most beginners and c have set yourself up for real financial freedom starting right now.
And by the way, if investing is your main priority in 2026, I'm hosting my second completely free live workshop in less than a few weeks, teaching you everything from how to invest, what to invest in, in even more detail than I'm going to go through in the next 15 minutes. It's completely free. You can sign up at nisha.me/invest or click the link in the description to sign up before the doors close.
So, starting with step one, and that is get your financial house in order. Here's a stat that might surprise you. Nearly 40% of adults can't cover a $400 emergency without borrowing money. And this is the kind of thing that makes investors fail before they've even started. Because if your car breaks down or your boiler explodes or life just happens and you don't have cash set aside, you'll be forced to pull money out of your investments at potentially the worst possible time. That's why if I was starting from scratch today, I wouldn't open up an investment account or buy any stocks until I got the basics right.
It's so easy when you start investing to make the classic mistake of thinking you could skip this step. Especially when you have people around you who are well on their way to making six figure or having six figure portfolios or you see loads of YouTube videos with other people in their portfolios which are six or seven figures and sometimes it makes you feel like you're so desperate to catch up with these other people that you start throwing as much money as you can into the stock market not just from your income but from your savings too. and then you end up buying stocks with money you can't really afford to lose. And when you do that, if you don't really know what you're doing and the market dips, it's so easy to panic, sell too early, lose confidence, and then being at a worse place than you were to start with.
So, if I was investing for the first time, knowing what I know now, there are three things I would make sure before I even start investing.
Number one, I'll clear any high-interest debt like credit cards, store cards, personal loans. Because investing in the stock market when you have expensive debts is like filling a hot water bottle with a hole in it. The water is your money, the hot water bottle is your investment account, and that hole is your debts. Credit cards will often have interest rates of between 20 to 40%. Sometimes it can even be higher than that. Over the past 100 years though, the average stock market return has been around 8 to 10% annually based on the S&P 500 market index. You probably see where I'm going with this. You keep investing more and more money, but at the same time, you're losing money faster than your investments can grow and getting burned in the process. You always want to clear off your high interest rate debt before you start to invest. You will be financially better off by doing so.
Number two, I'd build an emergency fund. You want at least 3 to 6 months of essential expenses in a high interest or high yield savings account that's easy to access. If you really are so keen to start investing straight away, this might not be the thing you want to hear, but it is an essential step on your road to financial freedom because it'll help you sleep soundly at night and make better decisions when you're finally ready to start investing.
And then number three, I'll make sure my income and spending are stable. Well, that means just knowing exactly how much I can invest every month without putting myself under pressure. Because the thing is, when your basic financial needs are covered, you can actually stay calm during market dips because you don't have this urge to sell. You can ride out any chaos and you can just let time do the heavy lifting for your investments.
So, if you are at a stage where you're paying off debt or building that emergency buffer, don't see it as delaying your investing journey. Just see it as level one of your wealth buildinging plan because once your financial house is in order, you'll be ready to start investing with confidence and actually stay invested long enough to see real results.
Step two, that is define your goals and time horizon. Less than a third of investors have any specific long-term goals in mind when investing according to a survey of 10,000 investors done by the FCA. And honestly, that doesn't really surprise me. A lot of people start investing because they've just heard it is the smart thing or the right thing to do, but they never really step back to think about what they were investing for. They might open an investing app. They might pick a few random funds, maybe a trending stock or two, and they just hope for the best. Then, if the market dips, they hear rumors of a crash on the news, or they need money for a short-term expense, they sell.
So, if I was starting from scratch today, the first question I would ask myself is, what am I actually investing for? Is it to retire early? Is it to help me buy my dream home? Is it to travel the world? Because your goals will dictate everything from the type of account you use, the amount of risk you take, and how you handle the inevitable ups and downs along the way. I've got an upcoming video on what to invest in depending on your life goals because different assets are better depending on how long you're investing for. That is coming up in one of the upcoming weeks. So, make sure you're subscribed so you don't miss that.
When it comes to what you should be saving in cash and what to invest. So, first consider your short-term goals, if you need the money within the next 5 years, save for a house deposit or another big life event, keep that money and cash. Investments tend to outperform savings in the long term, but in the short term, it can be a bumpy ride.
Next, you've got your medium to long-term goals, which I consider to be 5 years plus away. With those goals, invest it. Because the longer your money stays invested, the more the short-term fluctuations in the stock market even out and the higher your chances of building real wealth. So, for example, we can see how much better an investment in global shares will have performed than cash since 2000. In this graph here, there's been a huge difference in performance over the last 5 years alone. Between 30th April 2020 to 2025, 2,666 invested in global shares grew to 4,926, while 1,58 in cash grew to just 1,714 over the same period. That is why you want to keep your long-term savings in investments.
By the way, we're going to cover how to invest in the rest of the video, but there is so much more to it that takes far longer than 15 minutes. So, if you want to take this even further, I'm hosting a completely free live workshop on 11th of January, 2026. I held this workshop in November, and over 35,000 people registered. And we asked people to fill in a survey afterwards where 96% of people said they felt so much more confident about what to invest in and how to invest and actually took action after this workshop. So, I'm hosting it again completely for free. You can sign up at nisha.me/invest. I'll walk you through how to invest and how to choose what to invest in. How to accelerate your investment returns over time. The single biggest mistake new investors make and how to avoid it. And also how to calculate what you need to eventually live off your investments. Again, it's 100% free. You can sign up at nisha.me/invest anytime before the doors close.
Now, let's get to step three, and that is choosing an investment account. This is where most people get stuck. There are so many types of investment accounts that it is so easy to fall into analysis paralysis here. You start researching one and then another and then another and then before you know it, you've done hours of scrolling but you haven't actually opened up anything. And I can see why this happens because from the outside investing seems really really complicated and like something you might even need a degree in. But in reality, once you've laid your financial foundations and you're clear on your goals, the next step is surprisingly simple. And that is open investment account and put money in it. That's it. You don't need a finance degree. You don't need a job in the stock market. You just need to take that very first small step. And suddenly you're 90% there of becoming an investor. The best part is you can literally do this in minutes entirely from your phone.
So which investment account should you go for? the answer. And I know you won't like this answer, but it depends on your goals and where you live. And here's what I'd do if I was starting from scratch this year.
So, first, if I was employed, I'd make the most of my workplace pension. Exactly how they work depends on your country, where you live, and the company that you work for. But usually, you'll find that your employer will contribute to and you'll get some sort of tax advantage. If your company's also contributing, you absolutely must utilize that. The downside, of course, is that you usually won't be able to access your money until retirement. So, if you need that money sooner, then anything after the match might not be the right option for you.
If you're self-employed, look for a private retirement account. With this, you'll still be able to save for retirement in a taxefficient way, but the difference is you won't have help from an employer.
Then, I'd open a tax-free or a tax advantaged investment account. Normally when you invest and make money say through dividends, interest or selling something for a profit, you have to pay tax on those gains. But when you invest through a tax advantage account, all of that growth stays as yours. You don't have to pay any tax on the profits, which can make a huge difference over time. Exactly how these accounts work will vary depending on where you live. In the UK, this is called a stocks and shares ISA. In Canada, they have a similar option called a tax-free savings account, which is a TFSA. And if you're based somewhere else, it's worth checking whether your country has a version of this because getting those tax benefits can really accelerate your long-term returns.
Then step four, start small, but be consistent. Here's something that people always get really surprised at. If you invest just 100 a month and earn an average annual rate of return of 8 to 10% a year, I say average because that is what the historical rate of return has been looking at the S&P 500 for a 10 to 20 year timeline. You will have more than 140,000 after 30 years and you will have only contributed 36,000 yourself. The rest of the money will be basically profit. That is all down to compound interest, which is basically when your investments start earning returns and then those returns start earning their own returns and over time it creates this snowball effect where your money begins growing faster and faster without you lifting a finger.
So to show you what I that actually looks like, you can watch this video right here which goes into a lot more detail on compounding. But to give you an overview, if you invest 100 and it grows by 8% in the first year, you'll end up with 108, meaning you've earned eight in interest. In the second year, 108 grows by another 8% which gives you 116.64, your money keeps working for you without adding anything new. Repeat that process year after year and it's amazing how quickly your wealth can snowball.
The thing is most people never get that far because they're scared of getting things wrong. In a survey from Barclays, 44% of respondents said a lack of knowledge was the main factor stopping them from investing and 41% said they were scared of losing money. If you feel the same way, I understand why. If you've never invested before, the stock market can seem really technical and really intimidating. But if you start small and you're consistent, and most importantly, you follow the next tip, you're very unlikely to actually lose money over the long run.
And that leads me to step five, which is diversification. So, let's imagine one of your New Year's resolutions is to eat a more balanced diet. You wouldn't then fill your plate with just pasta or just salad or nothing but chicken. You mix it up a bit so you're full. You have lots of energy. You get all the right nutrients. If you only eat one type of food, you might start feeling a bit sluggish or a bit unstable and you'll struggle to meet those health and fitness goals. Investing works in a pretty similar way. If your entire portfolio is made up of just one type of investment, say tech stocks or crypto, it might look exciting, but it's not exactly balanced. And when that one industry or that one company takes a hit, it throws everything off course. That's where diversification comes in. It's the financial equivalent of having a balanced plate. You want a mix of investments that work together so one performs badly, the others can help keep things stable.
So if I was starting from scratch today, I'd keep it very very simple. Rather than trying to guess which companies would perform best, I would invest in index funds. This is simply a collection of investments that track the performance of a whole market like the S&P 500, which includes 500 of the biggest companies in the US. So instead of betting on one company doing well, you're automatically investing in all of them all at once. And the great thing about index funds is that they make it really easy to diversify your portfolio in a cost-effective way. With one simple investment, you can get exposure to hundreds or even thousands of companies across different sectors like technology, healthcare, finance, energy, and more. That way, your returns aren't tied to the fate of a single stock or a single industry. You never really know which part of your portfolio will do best, but by holding a mix of assets, you don't really need to. The winners offset the losers. And over time, that balance helps you grow steadily without lying awake at night wondering whether you're going to lose all your money.
Step six, automate and simplify everything. Apparently, the secret to great investing is doing nothing. Fidelity once found that their best performing funds were the people who had either forgotten that they had an account or they had passed away. And that's a funny thing about investing. The people who check their portfolios the least often tend to make the most amount of money. Now, I'm not saying you should forget about your investments and completely forget that they exist, but it goes to show that the less you tinker, the better you'll usually do.
So, if I was starting from scratch today, I would automate as much as possible. What does that mean? That means setting up a monthly transfer from my bank straight to my investment account, ideally straight after payday before the money has a chance to get spent on anything else. This does two things. First, it makes investing consistent. You're not relying on willpower or timing. It just happens automatically. And second, it protects you from your emotions. When the markets drop, you don't have to decide whether to keep investing. The system does it for you.
So, think of it this way. When you automate your investing and you avoid all the doubt and the fear that comes with investing, you won't waste time thinking, "Oh, is now a good time to buy or maybe I should wait until after the next election." Instead, you'll be investing without having to think about it. You'll be able to get on with your life while your portfolio continues to grow in the background. Many platforms let you set up a regular investment plan into your chosen fund each month, so you don't have to log in and overthink it and accidentally talk yourself out of doing anything. In fact, some of these investment platforms are linked in the description below. With these, simplicity wins in the long run. Some of the best investors don't spend their days analyzing charts or watching market news. They spend their time just not really thinking about it because the goal isn't to outsmart the market. It's to build a system that keeps you investing no matter what the market's doing. And the beauty of automation is that it lets you do exactly that consistently, quietly, without any of the stress.
And step seven, I would learn to stay calm when the market drops. The stock market has crashed 19 times over the past 150 years. And every single time it's recovered and gone on to reach new highs. The problem is that when it happens to you, it never really feels like that. You're not going to think about this bigger picture. You're just going to watch your balance drop and wonder if you've just made a huge mistake.
This chart right here is from Morning Star and it maps out more than a century of stock market history. the Great Depression, the dotcom bubble, the global financial crisis, even the COVID crash. Some of these declines wiped out more than half the market's value. But what's incredible is what happens after each one. The market always bounces back, often higher than ever before. It took 18 months for the market to recover from the 2021 downturn. The CO crash took just four months. That's the fastest recovery in history. There it probably felt like a lifetime for new investors when they were in it. Even after the Great Depression, the worst crash ever recorded, investors who stuck with it eventually saw their portfolio recover and grow many times over.
When you zoom out and you look at this chart, those terrifying red dips, they start to look like just tiny speed bumps on a long climb upwards. When you're in the moment and you're staring at a sea of red on your phone or laptop, you go into crisis mode. And when I first started investing, I used to panic every single time the markets dropped. I thought I made a huge mistake just by investing. But what I learned is that the market rewards patience, not panic. And this is exactly why everything we've talked about so far matters so much. Like having an emergency fund, setting your clear goals, consistently investing, having a diversified portfolio. Those steps that we spoke about first, they give you the confidence to stay invested when everyone else is losing theirs.
So, if I was starting from scratch today, that is exactly how I'd do it. I'd get my financial foundation in place. I'd define my goals. I'll pick the right account. I'd start small. I'll diversify my investments. Automate the process. And most importantly, I would learn to stay calm when things get messy. Because you don't need a six-figure salary or a finance degree to invest. It is in fact the type of thing you learn while doing it. You probably will make some mistakes along the way, but as long as you stay invested, you keep learning and you focus on the long term, those mistakes won't define your results.
If you found this video helpful, you will definitely enjoy an upcoming video that I have on the different asset classes and how they all work to define your perfect investment mix. Make sure you're subscribed so you don't miss it. And feel free to share this with anyone else who's been thinking about starting their arresting journey, too.