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Scottish Sun
01-05-2025
- Business
- Scottish Sun
Our ultimate beginners guide to investing – how to turn £100 into £19k and three must-follow tips
Sun reader Martha Burns, 39, reveals how she has doubled her money in just two years after investing £100 a month CASH COW Our ultimate beginners guide to investing – how to turn £100 into £19k and three must-follow tips Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) INVESTING isn't just for the super rich, you can start with as little as £1 - and the earlier you get going, the more your money can grow. Here Holly Mead, who has 14 years of experience writing about investing, helps you get started with her ultimate guide to getting started. 1 It's important to make sure your money is working hard especially because inflation is expected to rise Firstly, do you have enough money to invest? Experts say you should have three to six months' worth of wages in a savings account you can access before you start. And are you prepared to lose it all. Once you've had this frank chat with yourself you can get going. You need to be willing to invest cash for at least five years to mitigate any dips and allow your money to recover. You can start with as little as £1 - but the returns you make will depend on how much you invest and where. If you invested £25 a month in a cautious fund, after 10 years you could have £3,337 and if you chose an adventurous fund you could have £4,599, according to Moneybox. Switch bank accounts for free perks If you invested £50 a month in a 'balanced' fund, after 10 years you could have £8,802 and investing £100 a month in the same fund could grow to £17,801. But put £100 a month into an 'adventurous' fund and it could grow to a hefty £18,990 after 10 years. Where to start For a new investor, choosing a ready-made fund is often the simplest way to get started. Others, like Hargreaves Lansdown and AJ Bell, have ready made 'mult-asset' funds, which invest in a range of different things such as company shares, bonds issued by governments or companies, and gold. Having a diverse spread of investments can help reduce the risk of ups and downs. 'People think you're rich if you invest, but that's not true' MARTHA Burns started investing in June 2023 after watching YouTube videos about how to get started. 'I have always saved and made sure I had enough for a rainy day, but I wanted my money to grow,' she said. Martha, 39, who lives in Bermondsey, London, opened an account with investment firm Vanguard and set up a direct debit to invest £100 a month. She chose the Vanguard US Equity Index fund, which tracks more than 3,500 American companies. It would have grown a £1,000 investment to £2,172 over five years. 'I wanted to invest in America because it is the most important economy in the world. I knew it had performed well and believe it will continue to do so,' said Martha, a comedian. She selected Vanguard after reading positive reviews about the company and seeing it had low fees. It charges £4 a month for a Stocks and Shares Isa plus her fund fee of 0.1 per cent. She plans to leave her money invested for at least 20 years and hopes she will be able to invest more in the future. In less than two years, Martha's pot has grown to more than £2,200. 'The moment you mention that you invest, people assume you are secretly loaded, but that is not the case. "You can start with a small amount and it is easier than you think,' said Martha. But what type of investor do you want to be? 'Cautious' or lower-risk funds have a smaller proportion invested in the stock market and more in government bonds and gold. 'Adventurous' funds have more in the stock market, which can mean greater returns but also more risk. 'Balanced' funds are somewhere in the middle. It is important to check what your fund invests in before you commit any money to make sure you feel comfortable. Most apps let you set up a direct debit to invest a set amount each month, so you don't have to remember to do it. This can help boost your returns over the long-term because it means you invest consistently, even when the stock market falls. Sarah Coles from Hargreaves Lansdown said: 'Don't feel you have to be able to go on Mastermind with investing as your special subject to get started. "If you set up a direct debit into a diverse fund, like a multi-asset fund, and pay into it gradually, you will be surprised how it can build over time.' The best apps to use Choosing the right app or website for you can be confusing as there are a lot out there. When deciding, it is important to look at the fees and the minimum amount you need to invest. Check that it offers the types of investment you want, see if you like the look and feel of the app, and read reviews from other users. Wealthify is a good option for newbies as you can start investing with just £1. You choose how much you want to invest, how confident you are and whether you want ethical investments, and it does the rest. It charges 0.6% a year plus the cost of your fund. Nutmeg is a popular option but you will need £500 to get started. Its 'fixed allocation' option invests your money based on the level of risk you want to take, with five options from low to high. For a £500 investment it charges 0.65% a year, which is about £3.25. Companies like Hargreaves Lansdown and AJ Bell are popular with people who want to be more hands-on in choosing the funds and shares they invest in, and offer a huge amount of choice as well as best buy lists to help you whittle down the option. Be aware of risk IF you have enough cash savings to invest - then the returns are impressive. On average, since 1899 the stock market has delivered an average return of 4.8% a year, compared to an average of 0.5% if you kept your money in cash savings, according to Barclays. That means if you had put £100 in the stock market in 1899 it would be worth £31,888 in real terms today, while the same amount put in cash would be worth just £190. But as we have seen recently, the stock market can also fall. The American stock market saw its biggest drop since the start of the Covid pandemic after US President Donald Trump announced plans to introduce punitive tariffs on goods imported to the US from other countries. The UK's own stock market, the FTSE 100, fell by more than 10 per cent after the news. This is only actually a problem if you need to access your money but if you've got a long-term savings goal then the market will usually bounce back. Ups and downs in the market are called 'volatility', but the idea is that over the long-term you can ride out these bumps and your money will grow, although it can feel uncomfortable at the time. That means it is crucial that anyone considering investing is willing to tie their money up for a minimum of five years, as this gives your investments time to recover from any dips. You do need to be prepared to lose it all. How much does it cost? There are two main costs to be aware of when investing. Firstly, you will pay a fee for the app or website you use - this is either a flat rate per month or year, or a percentage of the amount you invest. For example, if you invested £500 and the fee was 0.5%, this would be £2.50 a year - although be sure to check whether there is a minimum charge. Then you will also pay for the actual investments you choose. This will either be a set charge each time you buy or sell an investment, or a percentage of the amount you invest.
The Sun
01-05-2025
- Business
- The Sun
Our ultimate beginners guide to investing – how to turn £100 into £19k and three must-follow tips
INVESTING isn't just for the super rich, you can start with as little as £1 - and the earlier you get going, the more your money can grow. Here Holly Mead, who has 14 years of experience writing about investing, helps you get started with her ultimate guide to getting started. 1 Firstly, do you have enough money to invest? Experts say you should have three to six months' worth of wages in a savings account you can access before you start. And are you prepared to lose it all. Once you've had this frank chat with yourself you can get going. You need to be willing to invest cash for at least five years to mitigate any dips and allow your money to recover. You can start with as little as £1 - but the returns you make will depend on how much you invest and where. If you invested £25 a month in a cautious fund, after 10 years you could have £3,337 and if you chose an adventurous fund you could have £4,599, according to Moneybox. If you invested £50 a month in a 'balanced' fund, after 10 years you could have £8,802 and investing £100 a month in the same fund could grow to £17,801. But put £100 a month into an 'adventurous' fund and it could grow to a hefty £18,990 after 10 years. Where to start For a new investor, choosing a ready-made fund is often the simplest way to get started. Others, like Hargreaves Lansdown and AJ Bell, have ready made 'mult-asset' funds, which invest in a range of different things such as company shares, bonds issued by governments or companies, and gold. Having a diverse spread of investments can help reduce the risk of ups and downs. 'People think you're rich if you invest, but that's not true' MARTHA Burns started investing in June 2023 after watching YouTube videos about how to get started. 'I have always saved and made sure I had enough for a rainy day, but I wanted my money to grow,' she said. Martha, 39, who lives in Bermondsey, London, opened an account with investment firm Vanguard and set up a direct debit to invest £100 a month. She chose the Vanguard US Equity Index fund, which tracks more than 3,500 American companies. It would have grown a £1,000 investment to £2,172 over five years. 'I wanted to invest in America because it is the most important economy in the world. I knew it had performed well and believe it will continue to do so,' said Martha, a comedian. She selected Vanguard after reading positive reviews about the company and seeing it had low fees. It charges £4 a month for a Stocks and Shares Isa plus her fund fee of 0.1 per cent. She plans to leave her money invested for at least 20 years and hopes she will be able to invest more in the future. In less than two years, Martha's pot has grown to more than £2,200. 'The moment you mention that you invest, people assume you are secretly loaded, but that is not the case. "You can start with a small amount and it is easier than you think,' said Martha. But what type of investor do you want to be? 'Cautious' or lower-risk funds have a smaller proportion invested in the stock market and more in government bonds and gold. 'Adventurous' funds have more in the stock market, which can mean greater returns but also more risk. 'Balanced' funds are somewhere in the middle. It is important to check what your fund invests in before you commit any money to make sure you feel comfortable. Most apps let you set up a direct debit to invest a set amount each month, so you don't have to remember to do it. This can help boost your returns over the long-term because it means you invest consistently, even when the stock market falls. Sarah Coles from Hargreaves Lansdown said: 'Don't feel you have to be able to go on Mastermind with investing as your special subject to get started. "If you set up a direct debit into a diverse fund, like a multi-asset fund, and pay into it gradually, you will be surprised how it can build over time.' The best apps to use Choosing the right app or website for you can be confusing as there are a lot out there. When deciding, it is important to look at the fees and the minimum amount you need to invest. Check that it offers the types of investment you want, see if you like the look and feel of the app, and read reviews from other users. Wealthify is a good option for newbies as you can start investing with just £1. You choose how much you want to invest, how confident you are and whether you want ethical investments, and it does the rest. It charges 0.6% a year plus the cost of your fund. Nutmeg is a popular option but you will need £500 to get started. Its 'fixed allocation' option invests your money based on the level of risk you want to take, with five options from low to high. For a £500 investment it charges 0.65% a year, which is about £3.25. Companies like Hargreaves Lansdown and AJ Bell are popular with people who want to be more hands-on in choosing the funds and shares they invest in, and offer a huge amount of choice as well as best buy lists to help you whittle down the option. Be aware of risk IF you have enough cash savings to invest - then the returns are impressive. On average, since 1899 the stock market has delivered an average return of 4.8% a year, compared to an average of 0.5% if you kept your money in cash savings, according to Barclays. That means if you had put £100 in the stock market in 1899 it would be worth £31,888 in real terms today, while the same amount put in cash would be worth just £190. But as we have seen recently, the stock market can also fall. The American stock market saw its biggest drop since the start of the Covid pandemic after US President Donald Trump announced plans to introduce punitive tariffs on goods imported to the US from other countries. The UK's own stock market, the FTSE 100, fell by more than 10 per cent after the news. This is only actually a problem if you need to access your money but if you've got a long-term savings goal then the market will usually bounce back. Ups and downs in the market are called 'volatility', but the idea is that over the long-term you can ride out these bumps and your money will grow, although it can feel uncomfortable at the time. That means it is crucial that anyone considering investing is willing to tie their money up for a minimum of five years, as this gives your investments time to recover from any dips. You do need to be prepared to lose it all. How much does it cost? There are two main costs to be aware of when investing. Firstly, you will pay a fee for the app or website you use - this is either a flat rate per month or year, or a percentage of the amount you invest. For example, if you invested £500 and the fee was 0.5%, this would be £2.50 a year - although be sure to check whether there is a minimum charge. Then you will also pay for the actual investments you choose. This will either be a set charge each time you buy or sell an investment, or a percentage of the amount you invest. My top three investing tips for beginners BRIAN Byrnes, head of personal finance at Moneybox, shares his top tips... Set a goal: Whether it's buying a home, retiring early or simply building your wealth - set a target and a timeline for how long you expect to take to reach your goal. Try to dedicate 30 minutes a week to learning about investing topics like stock market trends and compound interest as this will help you feel more confident. Keep costs - and risks - low: Consider lower-risk options like index funds, which track a certain stock market like the FTSE 100 or S&P 500. These are often cheaper than other investments and are diversified because they invest in hundreds of companies, which helps to reduce your risk. Investing small amounts every month will help you to stay consistent. Use an ISA: Every adult can save £20,000 a year into an ISA and all the gains you make are completely tax-free. If you are saving for your first home, consider a Lifetime ISA - you can save up to £4,000 a year in these accounts and get a 25% bonus from the government. Not having to pay tax on your gains helps to accelerate your growth.
The Independent
17-04-2025
- Business
- The Independent
What is sustainable investing and how can my money support green issues?
Amid an ongoing climate crisis while world leaders and businesses alike appear to roll back environmental policies and sustainability practices, the good news is that it's possible for your own money and investments to support businesses paving the way to a more sustainable future. More people than ever are looking to invest with a conscience. A recent 'Sustainable Signals' report by Morgan Stanley found that 77 per cent of individual investors globally want to invest for positive social or environmental impacts alongside market-rate financial returns. However, confusion over how to do this prevents many from taking action. Sustainable bank Triodos revealed 81 per cent of Brits are fearful of the future. Yet almost half (49 per cent) of all adults - and two-thirds (67 per cent) of 18-34 year olds - say they want their money to do good, but don't know where to start. If that's you, this is your starting point, as we show how you can align your finances to help build a greener - and fairer - world. What is sustainable investing? First, consider what sustainable investing means to you. You might want your investments to avoid destructive industries such as fossil fuels, tobacco and weapons. Or, you might prefer to invest in a way that pushes companies to do better - known as stakeholder engagement. For example, your fund may be invested in Shell or BP, but your vote as a shareholder will be used to encourage them to finance more green energy. Most sustainable funds tilt towards companies scoring well on environmental, social and governance (ESG) issues. Morningstar has rated thousands of funds on how well they do this. Others go further by solely investing in companies that are making a positive and measurable difference to the planet and society, known as impact investing. Think about causes which mean most to you: it could be cutting carbon emissions, protecting biodiversity or reducing poverty. Then, you can decide where to allocate your investments. A Stocks and Shares Isa allows you to invest up to £20,000 per year, without having to pay tax on any profits. While you could handpick individual companies, an easier (and less risky) approach is to choose from sustainable funds. Investment platforms EQ Investors, Triodos and Liontrust all offer highly regarded impact funds. The first two hold a Good Egg mark from ethical money site Good With Money, which means they can prove they are making a tangible difference. It's important to beware of greenwashing, where investment providers make inflated claims about the sustainability credentials of their products. The Financial Conduct Authority (FCA) has started to crack down on this issue though with a new labelling system to reflect different investment approaches. With or without these labels it's important to do some research yourself. Check fund factsheets as these will show you the companies they invest in, their objectives and how they're run. Some platforms have tools to help narrow down your options. For example, interactive investor has a best-in-class list of sustainable funds, ETFs and investment trusts called the 'ACE 40'. Innovative Finance ISAs An Innovative Finance Isa allows you to directly invest in individual pioneering companies and projects with a clear social or environmental mission. Any investments held in one will count towards your £20,000 tax-free limit. As examples, impact investing platform Ethex is currently offering bonds in ethical finance company Salad Money. Energise Africa offers investments in organisations bringing clean and affordable energy to sub-Saharan Africa. These investments are considered to be high risk (with the potential reward of higher returns), so it's important to include them only as part of a diversified portfolio. Pensions Greening your pension is 21 times more effective at cutting your carbon footprint than going veggie, giving up flying and switching energy providers combined, according to campaign group Make My Money Matter. Its research shows that UK pension schemes invest £88bn in fossil fuel firms, equating to £3,000 per pension holder. And for every £10 you put in the average pension, £2 is linked to deforestation. If you'd rather your retirement fund be used to invest in the planet's future as well as your own, consider moving it to a more sustainable provider. The PensionBee Climate Plan is a trailblazer in this area. It avoids companies with any ties to fossil fuels and also actively invests in those that are driving the transition to a low carbon economy. The NEST ethical fund and Penfold Sustainable Plan are also great options. Does sustainable investing mean sacrificing returns? Sustainable investing isn't pure altruism, it can also be a logical financial strategy. The idea is that companies making efforts to preserve the environment, treat staff well and have strong governance in place will do better financially in the long run than those focused on short-term profits alone. The latest Good Investment Review shows that actively-managed sustainable funds have performed comparatively well to their traditional peers in the last five years, despite difficult market conditions. Companies that do harm may face a future of increasing consumer criticism, regulation and financial penalties. In 2023 alone, the UK's 'Big Five' banks - HSBC, Barclays, Santander, NatWest and Lloyds - provided more than $55bn (£41bn) in finance to fossil fuel companies, according to a Banking on Climate Chaos report. Ethical banks and building societies avoid investing in environmentally harmful or otherwise unethical industries, treat staff and customers fairly and pay their share of tax. The gold standard here is Triodos Bank as it will only invest your money to make a positive impact on the planet and society. Building societies including Nationwide, Cumberland and Coventry (which recently bought the Co-operative Bank) are also seen as a good choice as they are owned by their members, not shareholders who receive dividends from profits. There are plenty of ways to use your money sustainably - you just need to find the one which suits your ideals and aims. When investing, your capital is at risk and you may get back less than invested. Past performance doesn't guarantee future results.
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The Independent
28-02-2025
- Business
- The Independent
Is it time to scrap the Cash ISA? Experts' view on Rachel Reeves' controversial plan to get UK investing
SPONSORED BY TRADING 212 The Independent Money channel is brought to you by Trading 212. One of the biggest talking points this year has been the UK's Cash Isa and what alterations Rachel Reeves may make to it. Early suggestions included removing it entirely, but more recent news has suggested a cap on the amount which can be saved, which is currently set at £20,000 per person per tax year (across all Isa types). For the uninitiated, saving money within an Isa makes it exempt from tax on interest earned. It is estimated that around £300bn in total sits in Cash Isas, which some have suggested could be put to better use were it invested, for example in a Stocks and Shares Isa. While it's true that over the long term this can generate better returns than cash, this approach doesn't factor in how or when people may need to access their cash. This has led to widespread debate among City executives, politicians and beyond about potential reform. But what about the people who use them? To get a broad representation of how a range of people use, or could in future use, a cash Isa, The Independent has spoken to a professional trading platform, a wealth management company for high net worth individuals, a money coach, a female money platform and one of our own money writers. The reasonings and insight each gave for different areas of society were varied, but the overarching message was clear: The cash ISA must remain and is an important part of UK society's wealth-building. And, even if a reduction in allowance won't hurt everybody, there's absolutely no guarantee it would have the seeming desired effect of pushing individuals towards investing instead - at least, not without far more guidance, education and understanding. And, let's be clear: that's exactly what these newly launched Independent Money pages are intended to bring for people. When it comes to building an investing culture throughout the population, the UK has a long way to go. But in savings, while people know how and why to do it, there also remains a wide gap in the ability of some families to do so, with a Yahoo Finance report last year showing 12 per cent of low income families have under £100 in savings. A crucial stepping stone Even so, with cash Isas being shielded from tax and an ideal location for anybody to contribute to, there's still a big role for them to play whether for those starting out on savings journeys or for those who have a bigger pile built up - especially, as Wealth Coach Sara Jane Maxwell notes, if they are not yet ready to move into investing. 'A cash Isa is a great tool. It works really well for people who are nervous or unsure about time horizons or don't want to venture into investments yet,' she told The Independent. 'I feel like it will be reduced, possibly not withdrawn altogether, because the government wants us to be investing rather than holding cash. 'When people come to me they usually have a cash Isa already but might not be utilising it to the full potential. I don't work with lots of people with huge balances in them, so the annual limit being reduced wouldnt impact a tremendous amount - but sometimes they might feel that being in an Isa [rather than regular savings account] puts their money at risk - so the more awareness of them, the more we make people have more interest in them, is a positive.' The Independent 's money writer Marc Shoffman agrees on cash Isa being a stepping stone towards future investing potential - and says branding is an important part of overall awareness on the subject which may be better served changing rather than some of the sweeping and, at times, complicated reforms which have been suggested elsewhere. 'People are naturally and understandably cautious about investing. Having personal finance education in school would help so that children build an understanding of how to generate wealth beyond how Hollywood or TV shows depict it. 'Getting people to save is hard enough so having a cash Isa provides a comfortable starting point and the products play a key role of putting money away for short term goals. Scrapping cash Isas isn't a good idea as there is no guarantee that the money would automatically go into backing British stocks, which appears to be the Treasury's aim. 'Better education and maybe a rebranding stocks and shares Isas to an 'investment Isa' would be a start in making this area more appealing.' The saving-investing knowledge gap That latter point on City execs and politicians seeming to think people will automatically divert more money towards investing is an important one, and a recurring theme. If people aren't already investing, there are reasons behind that - fear, knowledge, misunderstanding, timeframes, personal preference and risk appetite are all just some of the factors at play. It simply won't follow that being allowed to save less in one tax-free environment means the remainder will straight away be sent into shares, British or otherwise. Saving and investing platform Trading 212 's Head of Treasury, Gabriel May, explained that trying to time-lock using a cash Isa will simply see a change of location, not of mindset. 'People should be free to decide how they save. Forcing them to shift from cash savings to riskier products by undermining the Cash Isa is not only unrealistic but also questionable in intent. If this option is removed, people will simply move their money to less beneficial savings accounts, ultimately reducing their returns,' he said. Laura Pomfret, of female money platform Financielle, adds further context around that knowledge gap. Many people might have an idea of what they want to achieve in money terms, but be 'overwhelmed' about how to start, let alone get there. 'They come when they feel overwhelmed in their money journey,' Ms Pomfret says. 'It might be consumer debt, wanting to own a home, a large expense on the horizon. They usually have a financial goal in mind and not know how to get there.' Jumping straight into investing, then, isn't an ideal approach for many, even if they have started saving already. Entry point and wealth building The idea of savings being the only part of a person's, or a family's, wealth is a risky one over the long-term perhaps. But it's absolutely the most important one initially, and only once that is in place can they reasonably be looking further ahead at other products, other ways of looking after their futures. 'We start clients at the beginning: work to a budget which they then manage,' Ms Promfret explains. 'Is there an excess at the end of the month? If not, it's debt, overspending, credit lines. After sorting that, the very first thing we recommend is building an emergency fund, then stronger savings. 'It builds after that.' Cash Isas clearly have to remain available, but also accessible - even if people cannot fill out £20,000 or close to that a year, restricting what they can put in - without regard for family circumstance or size, or even stage of life, might simply prove restrictive for the long haul. Trading 212 's Mr May said: "It's a highly appealing financial product. It encourages saving by offering an attractive combination of a high interest rate, tax benefits, and flexible withdrawals. Building a financial safety net is essential for everyone's financial well-being. Our clients' data demonstrates that the product serves as an entry point into the broader Isa family, promoting long-term wealth accumulation.' Steve Jordan, director and co-founder at Five Wealth, said that while many clients grow more wealth through shares investments, he was 'strongly against' any removal of the cash Isa and pointed out the demographic who would be most at risk, were they somewhat backed into a corner where investments was their only tax-free approach available. 'A large proportion of the population only have cash savings and don't receive any financial planning advice,' he told The Independent. 'Low-risk savers and pensioners would potentially be disproportionately affected; the result for these people could be forcing them into paying more tax on their cash savings or forcing them into capital-at-risk investments that may not be suitable. 'Savers without much investment knowledge could make the move without the benefit of advice and could be unprepared for the volatility that may affect them.' It also shouldn't be just about moving from cash to stocks and shares Isas either, Mr Jordan notes, with Junior and Lifetime Isas being alternatives too. 'What about the Jisa and Lisa? These investments can have a timescale which is much shorter than that needed for investment. Shares may not be appropriate at all for people saving for a house or money that may be needed at 18. I agree that longer term excess savings are probably better invested in markets than in cash on a return point of view, but that's not always the only consideration,' he said. And yet, perhaps it won't be as dramatic as it all sounds. Perhaps political inertia will again reign supreme, as Ms Pomfret suggests - and actually, discussion around limiting something that some people don't already use might just encourage them to find out about it and get started. 'It will at least get press and attention. I don't think Ms Reeves will reduce it so much in the end - it'll be the usual approach of say something and then the end result is not as bad.' Whatever the eventual outcome for the cash Isa, it's clear that for long-term wealth building, saving remains the start of the journey and a critical step, even if longer-term, more people should certainly be looking to begin investing. When investing, your capital is at risk and you may get back less than invested. Past performance doesn't guarantee future results.
