What’s stopping you investing in stocks and shares?

If you think you don’t have enough money or knowledge to invest in the stock market, or are scared of losing money, this article might change your mind.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

According to research done by Halifax Share Dealing, 32% of Brits think they are too poor to invest in the stock market, 33% won’t invest because of fear of losing money, and 29% think they don’t know enough about it or how it works to get stuck in.

That’s a shame because they are probably using savings accounts, or maybe cash ISAs, that pay less than 2% interest.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

Funds that track stock markets like the FTSE 100 and individual stocks can be held in a Stocks and Shares ISA, which are as easy accounts to open. The FTSE 100 had an average return of 5.8% over the last five years. Some individual UK stocks had much higher averages.

There is a potential to become quite a bit more wealthy over time by investing in the stock markets. 

Too poor to invest

It is possible to make regular investments of just £25 per month into a stock market fund within an ISA. If you have £25 pounds or more to invest then you are not too poor to start. Of course, the more someone can afford to invest the more wealth they will build, but starting small at least gets the ball rolling, and in time you may find you can contribute more.

Fear of losing money

There is a chance of losing money with an investment in the stock market or individual stocks. However, owning more stocks and being invested for longer lowers the risk. Buying a fund that tracks the FTSE 100 index spreads the risk across 100 of the largest UK companies. A fund that tracks the FTSE 250 spreads the risk across 250 of the next largest UK companies. 

Research by AXA Self Investor demonstrated that investing for 10 years in the FTSE 100 made money 95% of the time between 1996 and 2016. The 5% of trials that lost money invested between January and June 1999, during the heights of the dotcom boom, and cashed out between January and June 2009, during the financial crisis. If one of these unlucky investors had waited a year or two, they would have been in the money again.

Trying to time the market is tough. Being in the market for the long term is what matters. On average FTSE 100 investors could have made 70% from 1996 to 2016.

Don’t know enough

The knowledge required to invest in a fund that tracks an index like the FTSE 100 or FTSE 250 is minimal. ISA providers will usually provide fund ratings. Choose the highest-rated fund that tracks the index you want and charges the lowest fee.

Investing in funds that pick stocks is a little more complicated. Some aim to provide income by picking dividend stocks. Some try to pick stocks in companies that are growing quickly and whose stock prices are anticipated to fly higher. The style (growth or income) and the skill of the manager are important considerations when choosing an actively managed fund.

Picking stocks yourself is going to require even more effort than choosing actively managed funds. Before you do anything other than investing in an index tracker I would suggest getting familiar with the world of investing.

Reading through the articles on this site is one way to start. Find a few articles about companies you are familiar with. Have a read about some funds. The more you read the more familiar the investing world will become, and the more informed your decisions will be. 

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

James J. McCombie has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

A person holding onto a fan of twenty pound notes
Investing Articles

3 top dividend shares to beat a new recession

I believe that good dividend shares are my best approach to keeping my money safe in a recession. Here are…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Down 80%, this growth stock is a ‘no-brainer’ buy

Growth stocks have faced a torrid time recently. However, after falling 80% since its highs, this FinTech looks too cheap…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Warren Buffett is pouring money into stocks! Here’s a FTSE 100 pick I think he’d buy

Warren Buffett has been investing in several US stocks recently. Here's a FTSE 100 stock I think he'd also be…

Read more »

A Rolls-Royce employee works on an engine
Investing Articles

Is the Rolls-Royce share price on the verge of recovery?

A recent trading update showed the company is benefiting from increased flying hours, so will the Rolls-Royce share price soon…

Read more »

Girl showing thumb up, excited about upcoming shopping
Investing Articles

Is now a good time to buy Tesco shares?

After a strong rally last year, the Tesco share price has stalled. Roland Head gives his view on investing in…

Read more »

The BT Tower looming above London's skyline
Investing Articles

3 reasons to buy – and not buy – BT Group shares

The BT Group share price has a rock-bottom valuation right now. Is this a red flag or does it make…

Read more »

macro shot of computer monitor with FTSE 100 stock market data in trading application
Investing Articles

2 cheap FTSE 100 dividend shares! Should I buy?

These two FTSE 100 dividend shares offer terrific value for money, on paper. Should I load up on them today,…

Read more »

Cheerful young businesspeople with laptop working in office
Investing Articles

5 steps to target a monthly £300 passive income

With his eyes on a target of monthly passive income, here are five steps our writer would take to try…

Read more »