When you are looking to build your skills as an investor, the main thing you want to do is get started. The sooner you start, the sooner you learn the ins and out’s of the process to figure out what works and what doesn’t. It’s not necessary to start using real money at first. You could always get started trading with a paper account.
Keep in mind, that you are bound to make mistakes. No one is perfect. You will make mistakes and it’s your job to learn from them. The key is ensuring that you aren’t making the same mistake over and over again. Also, you want to stick to only investing money that you can afford to lose.
You can find a lot of good resources for beginner investors. Twitter is a great place to see what other investors are thinking about specific stocks or even about the macro economy. Reddit is another good option to consider, but you’ll have a lot more anonymous insight on that platform. You can always check up on news outlets to see what the analysts are saying. A good thing to do would be to set up company-specific alerts. This can help you key in on some of the companies that you are looking to follow, for instance; The European Smaller Companies Trust.
You also want to keep tabs on your chosen provider. They likely have a lot of in-depth research and news that you can keep tabs on. You always want to leverage as many resources as possible to see which stocks are getting hot and which companies have earnings coming up.
Other Investment Opportunities
If you are seeking more variety in investments outside of stocks and funds, you can consider some of the investment choices below. You will find that some of them will be riskier than others. For instance, property investments can yield excellent returns, but you do need to consider the fact that a lot of your investment would be stuck in a single asset. Cryptocurrency is another alternative investment option but they aren’t entirely regulated yet in many countries including the U.K.
Property
You could opt to invest in property. This will allow you to earn semi-passive income from collecting rent. You could also make money on the total your home or property appreciates from the time you paid for it to the time you sell it.
Alternative Investments
You can find a range of alternative investment options. These can include art, wine, vehicles, or pretty much anything else that can be collected and that will appreciate over time.
Stay In Cash
If you are aiming for something that’s much lower risk and you don’t necessarily care about outpacing inflation and generating high returns, you could keep it in cash. The biggest issue associated with remaining in cash is that inflation will eat into it. You ultimately lose buying power because of inflation.
Peer To Peer Lending
Peer to Peer lending is another option you could consider. It essentially makes it accessible for individual and smaller investors to lend out money to businesses or individuals for a specified interest rate. The biggest thing to know about P2P lending is the fact that it’s not guaranteed. You don’t have any guarantee on your returns and the borrower may default. This means you could lose your entire investment. It’s also not going to be covered by the Financial Services Compensation Scheme (FSCS).
Crypto
This is something that has generated a lot of interest over time. Over the years, cryptocurrency has skyrocketed in popularity. Millions are being made seemingly every week with cryptocurrency. As with anything that can generate massive returns seemingly overnight, there comes a lot of risk with it. It’s one of the most (if not the most) volatile assets. You will find the prices for crypto fluctuating constantly. It’s also not uncommon to deal with liquidity issues either. Depending on what crypto you are investing in, you may find it difficult to liquidate your position when the time comes.
How Much Does It Cost To Invest?
You end up paying a fee whenever you invest your money. These fees can include:
– Any related platform charges
You will typically have to pay a fee for the platform. Not all platforms have fees. However, if they do, you would typically pay out a percentage of your portfolio.
– Ongoing charges
You may have to pay ongoing fees to the manager of the fund. As with platform charges, this typically comes as a percentage of your portfolio.
– Transaction fees
These are fees that you are likely going to need to pay every time you purchase or sell some stock or option. Typically, this is known as commissions. Some providers do not charge commissions and instead use payment-for-order-flow.
– Foreign exchange fees
If you transfer your currency to another one, you could have to pay foreign transaction fees.
How Are Investments Taxed?
You will typically have to pay taxes on all of your profits. Here are some of the main things to know about in regards to taxes.
- Dividends Tax
Companies that offer a dividend do so to distribute profits among shareholders. It’s an incentive used by companies to keep shareholders happy. When you are investing outside of an ISA, you will ultimately be required to pay taxes on any dividend income that exceeds £2,000 annually.
Here are the respective tax rates for dividend payouts:
– 7.5% for basic
– 32.5% for higher rate
– 38.1% for additional rate
- Capital Gains Tax
This is the tax that you are required to pay whenever you sell any shares for profit outside of an ISA. You will pay capital gains taxes on any profit that exceeds £12,300.
If you are only a basic taxpayer, you would be required to pay 10% on everything above that specified amount. Whereas, if you are either higher or an additional rate taxpayer, you would be subject to paying as much as 20% on your capital gains.
Disclaimer: This content does not necessarily represent the views of IWB.