Why you should get started investing today

Since the launch of AJ Bell’s Money Matters campaign three years ago, more women have started investing. In the two months around tax year-end, over 40% of new AJ Bell customers opening accounts on the platform were women.

That’s not to say there isn’t still a huge amount of ground to make up to narrow that massive gender investment gap. We know that the number one barrier preventing women from investing is a lack of cash – from the gender pay gap to taking time out of the workplace to have children, or cutting back on hours to help cover childcare requirements, which still predominantly falls on women.

Then there are those caring responsibilities that crop up in later life, from older relatives to helping look after grandchildren. And if that wasn't enough, along comes the menopause - something that can impact a woman’s ability to keep working just at the time she might be hoping to top up that pension pot.

There has been plenty of noise from politicians about helping women in later life stay in or come back to the workplace, and big moves on upping the number of funded childcare hours, which will hopefully make a difference.

The second issue is a perceived lack of knowledge. More and more women come to AJ Bell Money Matters events because they’re thinking about investing. They just want more opportunities to learn, to ask questions and boost their confidence.

Never a bad time

Our latest event in Manchester was no exception and, as always, the number one question was “when is the best time to start?’”.

Now that’s a question that troubles many would-be investors no matter their gender, and a tried and tested answer is usually a play on “it’s not about timing the market, it’s about time in the market”.

To put it more simply, because stock markets aren’t linear and they go up and down, without a megawatt crystal ball you’re unlikely to happen on that exact sweet spot where your investments only head in one direction. But markets are cyclical, and even if your investments go down for a time, they will still give you the best opportunity for long-term growth.

A great example of that can be found by looking back just a couple of years to the massive global economic shock that was the pandemic, when much of the world shut down and stock markets tanked. The years since have seen us hit with a cost-of-living crisis, the war in Ukraine, rising tensions in the Middle East and a disastrous mini-budget courtesy of one Liz Truss.

With all that upheaval, if you had bought Fidelity Index World – a fund that provides broad exposure to the global stock market – on 1 January 2020, on paper you would have seen more than a 20% loss by mid-March 2020. However, if you had stayed calm, not sold, and patiently held onto your investment, today it would be worth 47% more than you initially paid (as of 14 May 2024).

Start small

One common misconception is that you need to have a big wodge of cash to get started. Actually, investing small amounts on a regular basis can be a really smart approach, because you’re buying investment units at different points in time, essentially averaging out prices, which can be a great approach when markets are volatile.

You can start from as little as £25 a month on the AJ Bell Dodl app, which is a stripped-down, jargon-free option perfect to help you build your confidence. And thanks to the power of something called compound interest, your small monthly investment can grow into something rather substantial, like a deposit for your first home.

Don’t be put off if you have a lump sum to invest, though. You could invest it all at once and get your investments working for you immediately, or you could consider spreading it into chunks, which removes the worry of making a lump-sum investment just in case markets experience a wobble in the weeks after.

Invest in what you know

You don’t need to be a financial mastermind or spend hours poring over the financial pages of news websites to start investing either. Think about your own life, the products you buy and the services you use. Chances are many of those products and services are delivered by publicly-listed companies, which basically means companies you can own little pieces (shares) of.

From the phone in your hand to the colour on your lips, you’ll know which brands are popular and which are less so. Some big stock market and household names include Apple, LVMH, Netflix and Primark owner Associated British Foods.

If you want some help to make sure you’ve got a good spread of investments, what you may hear referred to as a “diverse portfolio”, you might want to consider funds. That’s where you pool your money with other investors to get a stake in a ready-made portfolio.

There are thousands of examples but a great place to start is the AJ Bell favourite funds list. While the fund names themselves might seem like they are written in a foreign language to newbie investors, if you take a look at what is in their ‘holdings’ section, you’ll get a clearer idea of what’s in the tin.

You're probably already an investor

Back in 2012, auto-enrollment in workplace pensions began so chances are you’re already an investor – if you have a pension, it will be invested. A really useful place to start is to look at your existing pensions and see where your money is invested and how it’s been working for you.

If you work part-time you might not qualify for auto-enrollment. If you earn less than £10,000 a year from a single employer you can still ask to join your workplace pension scheme, but just remember, although they can’t say no, they don’t have to contribute if you earn less than £520 per month.

Read more about Dodl ISAs