4 things to know before you invest on your own

Many of today’s investors are turning to self-managed investment platforms and products such as stocks and shares ISAs and SSIPs, which allow individuals to manage their own investments on digital platforms. The approach may be more familiar to tech-savvy Millennials and more sophisticated independent investors, but it isn’t without its risks. Before considering the approach, you must be clear on four key questions.

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What are your objectives?

Every investor needs to know why they are investing, and this is the first question that would be asked by a traditional IFA. You might be investing for your pension, for your children or grandchildren, or to create a trust or legacy for a cause that you feel passionate about. Everyone will have their own personal drivers defining their strategy.

What is your risk appetite?

Every investor has a natural appetite for risk that will determine the asset classes and individual investments and trades that they make. For example, emerging markets represent higher rewards and higher risk. Steadier UK FTSE funds may represent lower risk but will have lower returns.

The link between risk and return is typically inverse, and the trick to success lies in creating a balanced portfolio that doesn’t keep a person’s eggs all in one basket. Back office systems for IFAs, such as the ones used by intelliflo.com, help to flag up suitable opportunities that match personal needs.

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What is your appetite for research and tech?

If an investor is happy to spend a lot of time researching the market and carrying out trades at the right time, they may thrive as a self-invested investor. Others will adopt a “buy and hold” strategy. If you are planning to manage your own portfolio, you will need to be comfortable with technology in order to carry out trades online and use the tools and online analysis.

What are your timeframes?

Most IFAs will recommend that investors have time frames of at least five years if they are planning to invest in the stock market. This is because the fluctuations of stocks and shares can be significant, and a longer time frame is needed to ride them out.

Answer these questions and you will have your preparatory steps ready to begin your investment strategy and a happy, successful and long-term journey as an investor.

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