The 12 Tips Of Christmas – All 12 Tips Of Christmas Posts
Save Some Money – Referral links to receive money off
Merry Christmas and welcome to the ninth post of my 12 Tips Of Christmas series.
These are a series of posts that will be going out on the lead up to Christmas and the New Year to help guide you towards a better money mindset with an aim to give you a base knowledge of personal finance.
This is the second part of a quick run-through on getting started on your investment journey. Click here to see the previous post.
So after dipping our toe into the markets, and putting in our first £25, we now want to make this a regular thing. So much so that it becomes second nature and you barely notice the money coming out of your nominated account each month.
Our aim is to make this sort of investing behaviour a natural part of our monthly finances; slowly pound cost averaging over multi-decades, ignoring short-term market news in favour of long-term, patient, organic growth.
Most platforms will allow you to determine a set amount which will come out of your nominated bank account on a set date each month.
It will require a minimum of £25, per investment, but you can have months where you choose to not contribute anything at all, or simply keep it all in cash for the time being (this is the ‘cash to be held on account pending investment’ section under ‘Total’ at the bottom).
For HL, this money is taken out on the 7th each month, but usually won’t actually be added to your chosen fund/ share, until about the 10th. There is some delay I think due to the vast amount of investments the broker deals with each month and probably a number of other back-end workings that I’m not privy to. I expect Vanguard and AJ Bell and the like are similar but I can’t confirm that.
The idea behind setting up a regular investment plan like this is to remove as much of the psychological aspect of investing from the process as possible. We’re not trying to time the market. Sometimes our monthly investments will fall when the market is cheaper, and sometimes at its highest, but over the course of the multiple decades we’ll be investing over, historically this should average out to give us a solid rate of return given we’ve diversified our investments appropriately (please do your own research on this).
Of course, we can add a lump sum if the market dips considerably – I did this earlier this year – but we’ll still have that regular monthly amount going out too, no matter what.
Some people may actually want to pick their own shares. And that’s perfectly ok too if that’s what you want to do. Just make sure you’ve done your due diligence on each company, have a buy price you’re comfortable buying the shares at, a sell price you will be willing to realise profits at and whether you’ll make this a regular investment or whether you will only buy if the price dips/ rises.
Automating the investment process takes as much of the thinking out of investing as possible.
Sometimes the biggest barrier in investing is our own human capacity to overthink and unnecessarily complicate the process. These regular monthly amounts make this as easy as paying your Netflix bill, but with the benefit of contributing to your future wealth.
So once you’ve chosen what you want to invest in and the broker you’ll be using, take a look at setting something like this up to regularly invest your hard earned money and get it working for you with as little admin as possible.
None of this is financial advice. Please do you own research on which platform and investments are best suited to you. What works for me may not work for you.