Are you ready to start investing?

4 mins readLast updated October 4, 2023by Karen Barrett

Investing wisely can help you develop your savings and achieve your financial goals. But it can come with risks too. We break down five key things you need to know before you start investing.

How to invest wisely

With interest rates in the US almost flat for years, investing has long been the go-to method of building wealth for many people. From real estate to equities, investing money — rather than saving it — has been incredibly attractive in recent years.

But this isn’t to say everybody in the US has invested their money. In 2022, just over half of adults owned some kind of stocks, often through savings accounts, such as a 401(k). And as younger generations move into the labor force and start to develop their own saving and investing accounts, there are many millions of young people looking to invest their money for the first time.

But it’s important to remember that investing isn’t a game. While it can help people build their savings, there’s never any guarantee of improved returns. If you’re looking to invest for the first time, it’s important to know how to invest safely so that you can protect your money while still generating returns on your investments.

1. Assess why you want to invest in the first place

For the majority of people, investing is one of a few different routes toward achieving their financial goals. For some, this could mean buying their first property, while for others it could be simply a question of growing their savings. Whatever the reason, you should ask yourself what the goal of your investing should be.  

It’s no secret that successful investing can generate significant returns when done correctly. But for first-time investors, often the best course of action can simply be to familiarize yourself with the main tenets and strategies of investing. Should you go looking to generate returns at the earliest possible opportunity, you can find yourself caught in a gold rush that can lead nowhere. 

2. Assess your financial circumstances

You should also be honest with yourself about your own financial circumstances. If you have a high level of debt, for instance, any funds you have earmarked for investment may be better used for your long-term financial health by paying down these outstanding debts. If you do need to pay off outstanding debts, particularly ones with high interest rates, there are some simple steps you can take to improve your financial health, but investing isn’t one of them.   

Equally, you should only ever be willing to invest money you’re happy to forgo access to for at least five years. If your investments could leave you without at least three months of emergency funds, it may be worth focusing your efforts on building a safety net before taking on any investments.

3. What is your risk appetite?

Investing carries risks. The more money you invest, and the higher the risk on certain investments is, the more you risk losing. At the same time, though, investing in the safest investment classes may not generate the returns you are looking for.  

Ask yourself how comfortable you are with risk. How much money are you willing to invest, and how risky an opportunity are you willing to invest in? Moreover, how long are you prepared to stay invested? Investing is a long-term method of developing your wealth and you should maintain any investments for at least five years before considering cashing in. If you’re only looking to invest in the short term, you may be exposing your money to short-term disruption.  

4. Decide how to mix your investments

Rather than investing vast sums of money into single investments, it’s a good idea to build a balanced portfolio that contains a mix of safer and higher-risk investments. Putting too much money into a single option can often leave you significantly exposed to downturns in performance.  

This is particularly relevant to younger investors who prefer to buy alternative assets such as cryptocurrency. While there are lucrative returns to be made with these kinds of assets, they are also significantly higher-risk investments, and should be balanced out as part of a broader portfolio that minimizes your risk. 

5. Research properly

As younger investors look for ways to use their money effectively, traditional forms of taking on financial advice are falling by the wayside. Increasingly, young people are getting financial and investment advice from social channels. Studies show that around two-thirds of young people are getting financial advice from TikTok and YouTube, while only around 24 per cent of Gen Zers use a traditional financial advisor.  

Getting financial advice from social media isn’t necessarily a bad thing. However, it’s important to make sure you’re doing your own research to back up whatever advice you are picking up.  

You should also remember that no matter what investments you decide to make, there are often hidden costs associated with using certain platforms or apps. Transaction costs, account fees and investment management fees can all drain your expected returns, so make sure that you are keeping a close eye on hidden costs that you might incur.  

Karen is the Founder and CEO of

Karen Barrett

Karen Barrett is the Founder and CEO of, the site that empowers people to make confident financial decisions. Karen, has been shortlisted for Scale-Up Entrepreneur of the Year at the Great British Entrepreneur Awards and British Businesswoman of The Year Finalist.