If you’ve never invested in the stock market before, doing so for the first time can be a daunting experience.
You’re likely to have many questions as a beginner. Who do you open an account with? What kind of account do you open? Should you invest in stocks or funds? Do you invest in the UK or overseas? It can certainly be overwhelming.
However, investing in the stock market is probably easier than you think. These days, it really is super easy to set up your own investment portfolio. With that in mind, in this article, I’d like to walk you through what I’d do if I was starting an investment portfolio today.
The first thing I’d do if I was just starting out today would be to open an account with a reputable investment company and I’d pick Hargreaves Lansdown over other providers. The reason I’d go with Hargreaves is that the company offers a world-class platform that allows you to invest in a huge range of stocks and funds, and the company also provides an excellent level of customer service. If you need help, you can normally get on to an adviser at Hargreaves on the phone in under a minute, which is a big plus when you’re just starting out.
Stocks & Shares ISA
My next move would be to open a trading account. Now, these days you have a few choices when it comes to trading accounts. You can invest through a regular share trading account, a Stocks & Shares ISA, or a SIPP (Self Invested Personal Pension).
Personally, I’d go with a Stocks & Shares ISA. The reason for this is that this kind of account allows you to shelter your investment gains and income from the taxman. Moreover, it’s also an extremely flexible account that lets you withdraw your money at any time. Overall, I think it’s a great choice for long-term investors.
In terms of investments for my Stocks & Shares ISA, I’d start off by putting my money in a couple of investment funds. With a fund, your money is pooled together with that of other investors and managed by a professional portfolio manager, meaning you don’t need to worry about picking stocks yourself. To lower the overall risk of my portfolio, I’d invest half my money in a UK fund, and the other half in an international fund.
If I was picking two funds today, I’d probably go for the Lindsell Train UK Equity fund for UK stocks, and the Fundsmith Equity fund for global stocks. Both are managed by top fund managers who have excellent long-term track records.
Once I became more comfortable with investing, I’d look to buy some individual stocks myself.
Regular investment plan
Finally, I’ll point out that I wouldn’t invest all my money at once, just in case the stock market was to take a hit in the near future. Instead, I’d set up a regular investment plan and drip feed my money into my portfolio every month to average out my entry prices.
That’s it really. It’s not that complicated, is it? In fact, all four steps could be done in the space of about half an hour these days. If you’ve never invested in your life but are keen to get started, what are you waiting for?
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Edward Sheldon owns shares in Hargreaves Lansdown and has positions in the Lindsell Train UK Equity fund and the Fundsmith Equity fund. The Motley Fool UK has recommended Hargreaves Lansdown. 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.