Research on behalf of HSBC, asked Brits why they haven’t chosen to invest – with the majority (45%) saying they don’t think they have enough money to do so.
Nearly a quarter (23%) say they don’t know enough about how to invest, and one in five (21%) say they worry about losing money.
Brits are also concerned about having access to their funds – with 37% saying they may need their money at short notice and another 30% stating that their financial situation means they can’t lock away money for a long time.
If you’ve never invested before, you may think you need to be an expert or have a lot of money. Yet when you start to separate the myths from reality, investing is now more accessible than ever.
Look beyond the stereotypes and you never know, it might even be right for you.
Myth 3: You need to lock your money away
Myth 4: You need to be an expert
Myth 5: You need to monitor your investments daily
Yes, there are risks involved with investing. That’s why it always comes with a warning: ‘you may not get back what you invest’.
But too risky? Before you can answer that, we need to explore how risk works and what it could mean for you.
All investments can be categorised on a scale of risk.
At the extreme end of the spectrum, you have your high-risk, volatile investments such as hedge-betting. These aren’t for the faint-hearted as the value of your original investment can yo-yo all over the place. This means you could gain a lot or potentially lose everything. We don’t offer this type of investment.
At the more sedate end of the spectrum, you can find some very low-risk investments, categorised as ‘cautious’. Invest into one of these and, although your investment isn’t without risk, its value wouldn’t be expected to fluctuate much. This means you could enjoy a much smoother, gentler ride over time. We offer these types of investments in our mobile app, online and through our advisers.
Whatever your appetite for risk, there’s an investment out there to match it – from the cautious to the adventurous and everything in between. The key is to understand the risks involved and how can they change over time. That way, you can make an educated decision about how much risk is right for you.
Why take any risk at all? Simply put, it could give your money greater potential to grow than cash savings.
This might have been true in the past but these days, you can start investing with less than you might think. And it’s now easier than before thanks to mobile apps, online fund platforms and online investment advice services.
If you’re an HSBC current account or eligible savings account holder, you can start investing online or in our mobile banking app with a lump sum of £50. Additional eligibility criteria apply.
There’s an annual account fee of 0.25% payable quarterly and ongoing charges of around 0.25% of the value of the investments you hold.
You’ll have access to the breakdown of these charges before you apply.
You’ve probably read that an ‘investment should be seen as a medium to long-term commitment’ or ‘you should aim to hold it for at least 5 years’. This is because the longer you hold an investment, the more chance you have of smoothing out the bumps.
This doesn’t mean you must physically lock your money away. With most investments, your money isn’t locked anywhere – and with HSBC there are no penalties for selling your investments. You can access your money at any time.
Still, you shouldn’t treat an investment like a savings account. Withdrawing your money early could negatively affect your returns. You want to avoid being forced to sell when the markets are having a downturn, as your investments could be worth less than what you put in.
Ideally, you should have between 3 and 6 months’ worth of expenses saved in an emergency fund before you start investing. So, if your car breaks down while the markets have a wobble, you can use your savings to get it repaired. That way, you can leave your investments untouched and give the markets time to recover.
If you invest in shares, you’ll need to do your homework and keep your eye on the markets. That’s because if the company you invest in does badly, you could potentially lose money. The price of your shares will also be affected by supply and demand, interest rates and the wider economy.
But buying shares isn’t the only way to invest.
If you're new to investing and have an HSBC current account, funds could be a good way to start. Buying into a fund is like buying a ready-made basket of investments. They spread your money across many different investments, which is like putting your eggs in lots of different baskets.
Funds can be less risky than buying individual shares in a single company. This is because a lower return in one investment, may be compensated by a gain in another. Spreading your risk in this way is known as ‘diversification’.
Perhaps the best thing about investing in funds is they’re put together by a fund manager – an experienced investment professional. So you’re essentially investing in an expert to invest for you. Fund manager’s fees are deducted directly from the investment.
HSBC has specialist teams of investment professionals who carefully select the investments in the funds we offer. As they manage them on your behalf, this leaves you free to spend your time doing something else.
To make it easier for you to start investing, we offer two different kinds of ready-made portfolios: regular and sustainable. Just choose the range and the risk level to suit you and we’ll take care of the rest. Eligibility criteria and fees apply.
Staying glued to the markets? You probably have other things you’d rather do with your time.
This is another reason why ready-made portfolios can be a good way to invest. They’re professionally managed to ensure they stay at your chosen risk level.
With a ready-made portfolio, you can invest and then pretty much forget about it. All you need to do is peek every now and then to see how it’s doing.
Even if you take the more hands-on approach and invest in shares, you don’t necessarily need to monitor them daily. Most online sharedealing services offer tools to help you do that. For example, you can set up share price alerts so your phone pings whenever a stock climbs above or drops below a chosen threshold.
And when you invest with HSBC – whether in funds or shares, you’ll see the balance of your investment account every time you log on to online banking or mobile banking.
There’s a perception that to do well on the markets, you need to buy when stocks are low and sell when they’re high. Investors can spend a lot of time and energy trying to identify when a share price has bottomed out or hit its peak.
Yet there are so many factors influencing the stock market. Predicting outcomes is practically impossible.
The important thing is to start as soon as you can and invest for as long as you can. There will be some downturns – maybe even some bad years – but as long as you’re not forced to sell during a dip (see myth 3), you may be able to ride out any turbulence.
Before investing, ask yourself how long you’re prepared to invest for. The longer your timeframe, the more volatility you may be able to deal with because you’d have more time to recover from any lows.
For example, if you’re 5 years from retirement, you may want to select a cautious investment. If you have 10 years or more to play with, you may be able to be more adventurous.
Again, if you’re not sure what’s right for you, you could seek investment advice to get a professional opinion. Eligibility criteria and fees apply.
Social media influencers might suggest it’s easy to make money on high-risk investments. But don’t be fooled. Look at what happened with the Dotcom bubble in the late 90s and what happened in the last few years with cryptocurrencies.
Markets tend to reward long-term investors. Instead of passion, you need a cool, calm head and the discipline and patience to leave your investments to grow.
All figures, unless otherwise stated, are from Sticky and Censuswide for HSBC. Total sample size was 2,018 adults. Fieldwork was undertaken between 27 to 31 October 2022. The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 16+).
