1. Just move itFirst, if you’re not sure whether you want to invest, transfer some cash into an Isa in order to make the most of your allowance. It doesn’t have to be a Cash Isa either – you can use the cash facility through a Stocks and Shares Isa while you figure out whether you want to invest. “You don’t actually need to invest to secure your Isa allowance for this tax year,” says Adrian Lowcock, head of personal investing at Willis Owen. He points out that you can place your money in cash and then come back at your convenience once you’ve decided where you would like to invest it. Though this comes with a caveat: the investment expert warns that if you do this, don’t just leave your money sitting in cash for months, because the interest rate after charges is often minimal.
2. Carefully consider your risk levelIf you’re sure you want to invest your money, make sure that you are comfortable with the level of risk you’re taking.
Before you rush into any decisions, Moira O’Neill, head of personal finance for Interactive Investor, says that you should understand your risk profile. “You may enjoy the good times, but can you cope with the potentially stomach churning falls if you opt for a high risk option? And bear in mind that too little risk can also be painful. “If you plan to invest for a decade or more, consider taking on a bit more risk, as you’ll have time to weather any stock market storms.” O’Neill says a globally diversified fund is a good solution for most investors, because it will spread your risk between hundreds of investments, even if you’re only investing a small amount.