CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider (Saxo Bank). You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money.

If you have not begun your Investing Journey then this article is for you.

Do you have savings goals? Are you in a position to make investments with the objective of getting a higher return than in a bank or building society?

What are investments?

To put it simply, an investment is an asset that is purchased by an investor in the expectation of achieving a positive return over a given timeframe.

There four main asset classes of investment;

There are other types of investments available, including:

What is a portfolio?

A portfolio is a collection of various assets that are owned by the investor. To help lower the risk of your portfolio, the general rule is to hold a variety of assets, “a diversified portfolio” across many different asset classes.

 What are portfolio returns?

The point of owning an investment portfolio is to achieve a specific rate of return, typically a return that is greater than holding cash.

A portfolio earns returns in various ways. It can be paid to you in a variety of ways depending on where you put your money:

Fees and taxes can reduce investment returns

Money and time needs to be invested into… investing. And service providers charge a fee for share purchases and sales.

In certain circumstances, investors are liable to pay taxes on their gains.

It’s important to ask for fees before you decide to invest as the cost can take a large percentage from your returns.

What are the risks?

Unfortunately investing doesn’t come without risks to your capital. There is no such thing as a ‘no-risk’ investment. But the amount of risk depends on the type of investment being made.

Whilst stock market investment returns may exceed interest and inflation in prices over a period of time, you could stand the risk of experiencing negative returns. This could ultimately lead to poor returns or, worst case scenario, losing your money.

As we mentioned earlier, it is a good idea to hold a diversified portfolio to minimise risk. That way, if one happens to underperform – you have others to fall back on. This is known as ‘diversification”.

So when should you begin investing?

You should only ever invest amounts that you can afford to lose. It is important to keep sufficient cash for your short term needs away from an investment portfolio.

If you have the money in your savings account, let’s say enough to keep you covered for approximately six months – you should consider investing it if you’d like to see your money increase over the long run.

It also depends on how you feel about the risks and if you truly believe you can afford to lose money should the investment perform badly.

I’m interested in building a share and/or bond portfolio

Building a Share and or Bond Portfolio

Get Started with CSS

Open an Account

Subscribe to our award winning daily newsletter

Voted "Best Market Newsletter" in 2012, 2014, 2015 and 2017 by the City of London Wealth Management Awards

Subscribe to our newsletter (Popup)

By signing up to our free email, you are consenting to receive these promotions. The newsletter is sent up to three times per day during the week and up to once per day over the weekend and is directed at UK residents. The newsletter contains company news, market movements, CSS research and promotions and breaking economic news. Occasionally our newsletter will contain advertisements from trusted partners. However, we will never give, sell or rent your email address to any other companies. If you want to stop receiving our free emails you can unsubscribe at any time by clicking on the link at the bottom of each email. You can read our privacy policy here.

No, thank you I am already subscribed