Financial education for young people 👨🎓👩🎓
Want to invest but not sure where to start? Lets talk about how you can begin trading.
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On your journey to financial literacy, one topic that is likely to come up quite a bit is investing. We certainly have been talking a lot about it here at GenMoney, and you can find our Market Monday updates and blogs on key financial news on our Insights page and Instagram. But now that you are informed about the markets and have some ideas for some stocks and funds you may want to invest in, how do you actually do it? Today we will walk through some of your options to begin your investing journey.
Why it Matters
Why start investing? You can learn more about why you should invest and some of the key principles to remember in our blog 💸5min Guide to Investing, but the key reason why you should start now is because returns depend on time. If you put £20 in the bank 10 years from now, and earn 7% each year (7% is considered the average or expected annual return on the stock market) for the 20 years you could end up with around £77. But, if you put £20 in the bank now and leave it there for 30 years, you could end up with £152! So, starting early can help you end up with more money when you need it in the future. Having more experience investing can also improve your understanding of how it works, making you are better prepared to handle larger amounts of money in the future.
How to Start Trading
So, if you can earn more by investing now, then how do you start? The first thing you are going to need to do is to open an account that allows you to buy and sell shares. In the UK, these are typically called share-dealing accounts, but they may also be referred to as a brokerage account, a share trading account, or a general investment account. You can also choose to invest through a stocks and shares ISA, which is an account that allows you to trade without capital gains tax (tax on profits from an increase in share price and dividends), but this is typically for longer-term investments (around 5+ years) and you could face fees for buying and selling in a shorter time frame.
To open one of these accounts, you will need to choose a platform to open your account on. There are tons of options for trading platforms out there, with some examples including IG, Hargreaves Lansdown, Interactive Brokers, and Capital.com, and in some cases, you can also invest through your bank. Before picking, you should do your research as their fee structures, investment options, and tools may vary, and you will want to make sure you pick the right platform for your needs and style of investing. Keep in mind that in the UK you can only hold shares in your own name if you are over 18. If you are under 18, you will need to consider your options differently, as you will need a parent or guardian to help you open either a Junior ISA or a bare trust, and you should talk with your parent or guardian about your potential options.
Once you’ve chosen your trading platform and what type of account you would like to open, it’s time to create your account! This will involve giving some of your personal details as well as bank account details to fund the account. Make sure you only give your details to a trusted trading platform and keep your login details secure. Approval for your account can take anywhere from a couple of days to only a few minutes. When your account is ready, you will need to fund the account, which is essentially just moving some money into that account that you can use to buy shares. After that, you are free to trade!
Don’t forget that trading does come with some risk. Your investments can increase in value but they can also decrease, so make sure you pick a strategy and investments that work for you. And remember to follow GenMoney to learn more about trading and investing!
Key Takeaways for You
Time Really is Money
The more time you give your investments to grow, the better, so it’s a good idea to begin trading early. This can also help you learn about the stock market and trading before you manage larger amounts of money down the road.
2. You Must Choose an Account Type and Platform
To begin investing you must make a couple of decisions. If you are over 18, you can choose between a share dealing account or a stocks and shares ISA. Then, you will have to choose a trading platform where you will open and manage your account. Be sure to do proper research before choosing.
3. Fund the Account and Begin Trading!
Once you’ve opened an account you can fund it by transferring money into the account and begin investing! Don’t forget the risk involved while you make your trading decisions.
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All content provided by Generation Money Ltd. is for informational and educational purposes only and is not meant to represent regulated financial advice or investment recommendations