Holly Mackay is the CEO and founder of Boring Money.
Investing can feel frightening. Stock markets seem complicated, there’s a whole world of choice, and then there’s the small matter of your money being at risk if an investment doesn’t work out.
But the truth is, fear of the stock market can hurt your wallet. Anyone who has a savings stash and a timeframe of at least five years should seriously consider investing, because the facts suggest you are likely to do better than cash. Extend this timeframe to 10 years and you are 91pc more likely to see your investments return more.
With cuts to annual cash Isa allowances for the under-65s heading our way from 2027, and the tax we pay on savings account interest ratcheting up at the same time, investments are set to feature more broadly in our financial plans.
I’ve worked in investment markets for more than 25 years – and investing today is easier than ever. Better technology and apps mean you can set up and manage an investment account online, but three big fears are still holding people back: fear of loss, wanting easy access to the money if circumstances change, and not knowing who to trust.
These fears can mean too many of us sit in cash and miss out on the bigger, longer-term potential of stock markets.
I’ll explain how to overcome or manage these fears, and provide recommendations for the best providers to get you started for savers with around £10,000 to invest.
Fear of loss
Fear of loss is the big one. The idea of putting money into something that can fall in value, even temporarily, feels uncomfortable – especially if you’ve worked hard to build up your savings.
However, it’s worth remembering that risk isn’t just about what you can lose by investing. It’s also about what you lose by not investing.
Leaving money in cash might feel safe, but over time inflation quietly erodes its value; as prices rise, the money you’ve saved can’t buy as much as it once could.
Shares are volatile, it’s true. But over time, the ups and downs smooth out. Recent geopolitical events have worried most investors, but we’ve seen things recover in the past (Covid, the financial crisis, the dotcom crash), and we need to keep the long-term in focus.
Mainstream stocks and shares Isas invest in household brands such as Apple, Coca-Cola, HSBC, Microsoft and Samsung. These companies may have good times and bad times, but it’s very unlikely they will all go bust at the same time.
Beginner investors should avoid speculative things like crypto and the latest “hot tip” from a friend. These might sound exciting, but they concentrate your risk rather than spread it, which is the opposite of what a new investor needs.
When starting out, a good rule of thumb is to stick to well-diversified collections of the world’s largest companies.
