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So I get it, investing can feel scary, especially if you're coming from a country where the economy isn't so stable. So you might have seen people lose everything, or even banks collapse. So the natural instinct is to keep cash instead of investing it.
I grew up in a culture where saving was king. We're told to work hard, keep every penny, and avoid risk at all cost. But when I moved to the UK, I realized that saving alone wasn't enough. So today, I'm going to show you how to start investing with just £1 without feeling fear, confusion, or feeling like you have to be a finance expert before you get started. This video is particularly tailored to you as a migrant to the UK. So stick around because this video is going to cover all the basics to help you get started investing.
And also, before we get started, a bit of a disclaimer here that this is not personal finance advice. I'm just sharing this for information and education purposes to inform you to be able to make a decision suitable to your personal situation or circumstance. So without further hesitation, let's get started.
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Before we talk about where to invest your first £1, let's talk about why it is important to invest. So why should you get started investing now? The reason why you should get started investing is that saving alone will not make you rich, okay? It's good to have savings, but if you want to build wealth, you need to then find ways to make that money work for you. And that's one way that the rich get richer.
So inflation is eating into your savings. So for example, let's say you had £1 saved up last year, and this £1 could buy you 50 packs of, let's say, just this, just as an example, 50 cartons of milk, for example. And then this year, £1 could only get you 48 packs of milk. So what this means is that even though the amount of money is the same, so £1 last year, £1 this year, the value has reduced. What £1 could buy you before is not the same thing that £1 can get you today. So what that means is inflation has eaten into your money.
But with investing, you give your money an opportunity to keep up or even outperform inflation. Because with investing, your money can even double, all right? So that's why it's very important for you to invest so you can grow wealth and also beat inflation. And here's how the rich get richer: the wealthiest people don't just save their money, they invest it. They let their money work for them instead of it just sitting in a bank doing nothing. And lastly, they think long-term. So if you want to build wealth or you want to make money work for you, you have to have a long-term approach to your finances. And the best part is that you don't need thousands of pounds to start. You can literally start with just £1, which is what I'm going into detail in this video.
Now let's talk about something that holds a lot of us back from investing, which is the fear of investing. And trust me, I've been there, okay? I've been there where I'm like, nope, I'm not going to invest. I've lost my money before in several types of investing things back in Nigeria, and I know how that felt. So let's tackle it.
So one of the biggest fears with investing is literally losing money, the risk of losing money. And I'm not going to come here and lie, because the truth is, with investing comes risk, and you need to make an informed decision before you invest. But as with anything in life, there are different levels of risk, okay? With investing, you have low risk, medium risk, and high risk. So you need to invest according to your risk tolerance. If you're someone that is risk-averse, then you want to ensure that your portfolio or whatever you're investing into is low risk as much as possible. So on the scale, you have individual stocks and shares are highly volatile, they are high risk. When you have like diversified asset types like a fund, which is like a collection of stocks and shares, that's a bit low or moderate risk. Bonds, a bond is a loan to the government or a company, those tend to be low risk because you have a fixed interest rate you're going to get at the end of the term. So basically, there is risk, okay? You can tailor your investment to suit your risk appetite.
Aside the fear of losing money, there's also not knowing, the fear of not understanding it, not understanding what's going on. And rather than let that fear stop you, I think you need to tackle it head-on. You need to start learning about money. This is the category I was in. I wasn't necessarily so scared about losing money, I was scared because I did not understand anything about investing. When you're talking about stocks and shares, I'm like, what's that? I don't even get that. Or they're talking about capital gains tax, or they're talking about ETFs. Like there's so many jargon. And honestly, it doesn't need to be that way. And all of those terms and the terminologies just really overwhelmed me, and it felt like something that I could not do. But trust me, if I can do it, you can get started as well.
So rather than let that fear of not knowing hold you back, you need to tackle it head-on. You need to start learning about investing. You need to become an informed investor because knowledge gives you confidence. I already shared in a previous video that I joined some online communities that really did wonders for me with my mindset and how I'm approaching investing. So you want to tackle that, blend things on YouTube, take up courses, join communities, attend webinars, basically tackle that fear by becoming an informed investor.
Another reason why we fear investing is also because of financial instability, especially if you're coming from an economy where it's not so stable and you've seen people lose everything through investing. Literally, I invested in something in Nigeria, like this agricultural something in Nigeria that was regulated, like they were registered, they were regulated, they were even backed up by insurance. Till today, I have not gotten my money back. And so that kind of experience clouded my perspective of investing and it made me very hesitant to start investing in the UK. But one thing you can be sure of is that the UK's economy is a bit more stable, and they have a bit more checks and balances. I work in the finance space, so I can tell you this, there are a bit more stringent regulations that makes it easier for your money to be secured, if that makes sense. So that's just something to know and have at the back of your mind.
So let me know in the comments below, do any of these fears relate to you? Or is there a fear of investing you have that I've actually not mentioned? Let's get to talk about this. What are your fears with investing? What's stopping you from getting started investing today? By the way, I already shared how I tackled my fear of investing in my newsletter, which I send out every Monday. You can catch up on that newsletter. Link in the description box below to sign up for free so you can always get like the emails I send every Monday sharing tips and insight to help you do better with money.
So how can you overcome this fear, right? The fear of investing? One of the very first things is to start small. So you don't need to start investing with thousands of pounds. You literally should just dip your toe in the water. I started investing in 2022 December, and I started with just £10. I didn't put more than that because I'm like, I'm still trying to figure this out, and until I get the hang of it, I'm not going to put all my money into this or a huge chunk of money. So you can start small to minimize your risk.
The second thing also is to understand your risk. Like I already explained, stocks can be volatile, funds tend to be a bit more moderate to low risk. So you need to understand the risk levels of the things you're investing in. The third thing is to actively seek knowledge, understand how investing works, get acquainted with the investing world, investing terminologies, join communities, if you must, take up courses. All right.
Another thing to do with investing is to think long-term. So before you start investing, you need to have at least a 5 to 10 year horizon when you're investing. It's not money you're putting this year to take out next year. You're not going to reap the best returns because compounding interest needs time in order to work out effectively. So you need to have like a time horizon of 5 to 10 years. So if you have less than 5 years, probably you shouldn't invest that money, you should be saving it. So think long-term with investing. All right.
And then another really critical thing is to use low-risk investment options, which I'm going to go into much later in this video. So we're talking index funds, which are really low cost and also like well diversified. You're talking ETFs. Basically, more on this as we go along in the video.
So now that we've dealt with fear, there's a lot of things you actually need to do before you start investing, but I'm just going to share just one or two or three points just so we can go into the main crux of this video, which is investing itself. So before you start investing, you need to clear your high-interest debts. So if you have high-interest debts, like you have a debt that is accumulating, like let's say 27% interest rate every month, it's in your best interest to clear those first because the chances are that the returns you get on investing is not going to be higher than the interest on that debt. So if you have high-interest debt, it's a good idea to want to clear that out first before you start investing.
The second thing is to have an emergency fund. Like I already stated, investing comes with risk, but you can manage this risk. And at the same time, you don't want to put all of your savings into investing. That's a very wrong move. So you want to ensure you have a hedge. So if you're looking at your investments today, it's going up, it's going down, you're not panicking because you've got money somewhere to keep life going. So you need to have an emergency fund. At the barest minimum, at least £1,000 in emergency fund before you start investing. The goal is to get you to three to six months of your living expenses, but before you get there, if you have at least £1,000, then you can start investing, just so you have money somewhere in case life happens.
The next thing to do before you start investing is to determine how much can you afford to invest monthly. And this is where knowing your numbers comes in. You need to know how much you spend monthly, how much you earn, and how much you're able to spare towards investing. One really cool way to do this is to track your finances, which is something I've always said on this channel. I track my finances every month because when you do that, you have a benchmark as to where your expenses sit on a monthly basis, and then you can be like, okay, based on this, I think every month I can actually afford to invest £50 a month, or I can actually afford to invest £1 a month. But basically, you need to determine how much you can afford to invest monthly. My simple income and expenses tracker sheet, if you want to use that to track your finances, is linked in the description box below.
And then last but not the least, I've said this before and I'm going to say it again, understand your risk appetite, okay? Don't copy someone else's investment strategy. Just because person A is investing in stocks, all their portfolio is stocks, does not mean that's what you should do. Or because person B is investing in this particular ETF, does not mean that's what you should do. You should know what your own risk appetite is and what your own strategy, how do you want to invest, how do you want to put your money into things. You need to have your own strategy and your own risk appetite, like really understand that and don't be swayed by what other people are doing.
So now we've come to the crux of the matter, which is where to invest your first £1. So for this, the very first thing you want to do when investing is to choose an investment platform, okay? So this is the platform where you're going to invest your money. There are several of them in the UK that you can choose from, but there are a couple things to look out for when you're choosing an investment platform.
The first is the annual management fee. Some platforms would charge you fees to invest using their platform, some would not charge you a fee. Now, the problem is this fee, although it can seem like it's a little amount, it can eat into your returns in the long run. So it's worth considering how much is the annual management fee for the platform you pick before you decide to open an account with them.
The next thing you need to consider when choosing a platform is the investment pool, okay? What is the size of funds and stocks they have? Do they have like a large collection of stocks and shares that you can invest into? Do they have a large collection of ETFs, funds, bonds, or do they have just a limited amount? Because you need a platform that has a lot of these asset types and you can invest in different things. You need a wide pool of asset types to pick from for your investment portfolio.
Another thing to consider when choosing an investment platform is the minimum investing amount. I mean, most platforms in the UK right now actually allow you invest with as little as £1, so this shouldn't be so much of a problem. Just consider how much is the minimum amount required to invest.
Another thing to consider when choosing a platform is access type. So there are some investment platforms in the UK that don't have an app. So what this means is you have to log into the web, so on your laptop, log into the web to see your portfolio, see what's happening, you know, with your investments. And then there are some that have an app, which is very convenient. You can just log into the app and see everything. So you need to consider, oh, what's the access type for your investment before you choose a platform.
And last but not the least, I mean, this should be a no-brainer, reputation. How well known is this platform before you decide to invest with them? So there are several out there. There's Vanguard, there's Trading 212, AJ Bell, Hargreaves Lansdown, Plum, Nutmeg. There are so many, but you just need to do your search and choose the one that works for you.
So once you've chosen your platform, next thing is to open a Stocks and Shares ISA on this platform. So Stocks and Shares ISA is an Individual Savings Account that is your investment account, okay? So Stocks and Shares ISA is equal to investment account. So with this account, you can then buy funds, you can then buy stocks and shares, you can then buy bonds. So you need to open a Stocks and Shares ISA. Usually, once you choose a platform and click that you want to invest, the next prompt will be opening Stocks and Shares ISA. So you open the account on the platform, and then you're ready to invest.
And also, one thing to mention here is that the really cool thing about Stocks and Shares ISA is that you have £20,000 every year to put into investing. And this money, whatever money you earn in your Stocks and Shares ISA as interest or returns, it is tax-free, which is why it's very important to ensure you're using the Stocks and Shares ISA, okay? You have £20,000 in each tax year to put towards investing, and any returns on it is tax-free.
Next thing after that, you want to choose the things you're going to invest into. And as a beginner, one of the best things you can do is to choose low-cost options like ETFs or Index Funds. So ETF means Exchange Traded Fund. So basically, they are just funds that are traded on the stock market, okay? So basically, either an ETF or an index fund. Some popular index funds or ETFs for beginners include the Vanguard S&P 500, okay, the FTSE 100. There's also the Invesco FTSE. All I'm going to list them on the screen. So these are some of the popular beginner-friendly ETFs. Once again, this is not a recommendation, I'm just telling you what I know is popular for beginners and easy to get started with.
So you pick what you're going to invest your money into, and then you pay money into your Stocks and Shares ISA. Now, this is something that I see some people get mixed up. Paying money into the Stocks and Shares ISA does not mean you've invested it. It is an account. So when you pay into an account, you have to then invest, okay? So when you pay into the Stocks and Shares ISA, you then move the money either to the fund you've picked or to the stocks. Honestly, as a beginner, it's best for you to just start with a fund. It makes it easy because it's low risk and it's well diversified. So you now move money from the Stocks and Shares ISA into the fund. So you'll be like, I want to buy this £10, this one, I put £5 here, and all of that. So depending on the platform you use, it's pretty straightforward.
So basically, that's it, and you've invested. Pretty simple, pretty straightforward to invest in the UK. And then after that, something you might want to do is then set up a direct debit to pay into the account. Some of these platforms, once you pay money into the Stocks and Shares ISA, they have like an option to then automatically invest for you, which makes it a bit easy. So once the money comes into account, then it automatically invests into the things you've already picked in your portfolio. And there you have it, you've started investing.
Now let's talk about something that I hear a lot of people say, which is, oh, when do I start investing? Should I wait until like the stock market is down, until the stock market is up? So let's talk about why you don't need to time the market, okay? The best time to start investing was yesterday. The second best time is today. So if you want to start investing, just start. There's no point waiting until it's low, until it's high. Rather, you need to have an approach called dollar cost averaging, where you are investing a consistent amount every month. So you are buying sometimes when the stock market is down, you're buying when it's up. Like it doesn't matter, what matters is that you're putting a consistent amount every month, and so you're able to ride out the ups and downs of the stock market, if that makes sense.
The reason why you don't have to time the market, right, is because no one can actually predict how stocks will perform. I mean, they can have predictive analysis and all of that, but all of these are speculations. No one can actually predict how the stock market is going to play out. So rather than trying to wait until, oh, everything is going to crash so that you can buy it at a low amount, it's best to just get started and keep your investment consistent over time. With dollar cost averaging, like I've explained, it means that if the prices go up, your investments will grow. And then if prices go down, it means that your money can then buy more shares of that particular stock or fund, if that makes sense. So point is, best to keep it regular amounts consistently rather than trying to wait till there's a dip in the market before you buy.
So there you have it, guys. We have come to the end of this video. And just to recap, to overcome your fear of investing, start small. You don't need to put a lot of money into it, all right? Use tax-free options like the Stocks and Shares ISA to invest and choose the right platform that works for you. Next thing is to start with ETFs or index funds to keep your costs low, low, and also to have a diversified portfolio. Keep investing consistently rather than trying to time the market. Just ensure you're putting a consistent amount every single month, and you're going to ride out the ups and downs of the stock market.
Now, I want to hear from you. What's one thing you're going to take away from this video? And I hope this video was really helpful to you. I tried my best to make it as simple as possible. If you have any questions, do leave it down in the comments below. And also, I'm currently working on a membership community where we talk about things like investing in detail, including like holding each other and keeping ourselves accountable on our goals. If you would like to join the waitlist for this membership community, link in the description box below. Make sure to sign up, and you also get an exclusive discount once the community goes live. Till next time, guys, thank you so much for watching. Bye-bye.
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