4 things to know when investing

There’s quite a bit to think about when you get started. So we’ve rounded up 4 things we think are must-knows to get you investment-ready.

Adopting a long-term perspective is crucial when you start investing.

Thinking long term allows you to harness the power of compounding, which means you earn a return on the returns each of your investments make. Over the years, small gains can snowball into much bigger returns. 

The longer you plan to keep your money invested, the more risk you may be willing to take. That’s because your money has more time to try to grow (and bounce back from any dips along the way).

Your investment value may dip sometimes. But you’re investing for the future, so you can stay calm when this happens. These ups and downs are a natural part of investing.

If you react suddenly and take your money out, then you may get back less than you’ve put in. It’s true that your investment value could drop further. But there’s also a chance it could pick back up too. It’s important to remember that past performance doesn’t guarantee how an investment will perform in future - but historically, over the long term, lots of types of investments have increased in value. 

So try to look past short-term dips and concentrate on the long-term potential of your investments. 

You can’t control how your investments will perform. That’s down to all sorts of things like news, politics and lots more. But the amount you invest, the risk you take, how often you invest – that’s up to you. 

You can invest as little as £1 with us. Or you can kick things off with more. Choose an amount that you can afford and start building good habits.

Your investment value can go up and down. And there’s a chance you could get back less than you put in. That’s why investing always involves some risk. But the important thing is the risk varies from investment to investment. 

We give you 3 ready-made options to choose from: Careful, Balanced and Adventurous. As the names suggest, each investment option comes with a different level of risk. And you decide how much risk you want to take based on your situation.

Investments that are more risky may get you higher returns, but they often come with more ups and downs too. Whereas less risky investments can mean you’re likely to see lower returns, but with less significant ups and downs along the way.

Regularly drip feeding money into your Pot could help you balance out ups and downs in the stock market that come along.

You can choose to invest in a single thing, or lots of different things.

If you invest in just one thing, you’re relying on it doing well to get a return – with no backup options if it doesn’t perform as you’d hoped. 

But by spreading your money out across lots of different things, if one thing doesn’t do too well, other things might do better – so your investment might do well overall. That’s known as diversification. And it’s a key part of investing successfully. 

You can spread your money out in lots of ways – into different types of investments, in multiple industries and even across various countries. Investing in funds can be an easy way to diversify your investments. That’s because they’re made up of a mixture of investments. 

When you invest with us, BlackRock (your fund manager) takes care of all of this. They’re one of the world’s largest fund managers. And they’ve designed your funds to be well diversified – investing across various companies, industries and regions. 

With us, you can choose to invest through either a Stocks and Shares ISA or a General Investment Account. And the taxes you may need to pay for each one work differently.

The taxes you pay depend on your circumstances and could change in the future. 

A Stocks and Shares ISA is one of four types of Individual Savings Accounts (ISAs). Each tax year, you can add up to £20,000 across your ISAs (you can only add up to £4,000 to a Lifetime ISA). And you can pay into more than one of the same type of ISA in a tax year (This doesn’t apply to Lifetime ISAs, though).

Now let’s talk about taxes. With a Stocks and Shares ISA, depending on your personal circumstances, you won’t pay income or capital gains tax on any returns you make – no matter how big. So it can be smart to make the most of your £20,000 ISA allowance each year.  

General Investment Accounts work in a different way. There are no limits, so you can add in whatever you’d like. But you may need to pay tax on returns or income you make. 

We’ve given you a few important things to consider when you start investing. But there’s lots more to learn along the way. So keep growing your know-how to help you make informed decisions and make your money work even harder for you. 

The value of your investments could go up or down and you could get back less than you put in.
This isn’t financial advice. If you’d like some, it’s best to speak to a financial adviser.  iShares® and BlackRock® are trademarks of BlackRock, used under licence. BlackRock has no obligation or liability in connection with any product or service offered by Monzo.

For more help on how to get started and FAQs, visit our Help Centre. 

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