Five investment tips to get you started...

Set yourself a time frame and financial goals before you invest.

Through investment, you have a much greater potential for growth than by leaving your money in a savings account.

In the current economic climate, with interest rates so low and inflation rising, you could be losing out by keeping your money in a savings account because inflation is beating the return on interest rates and, therefore, the real spending power of your money is less.

Investment can enable you to match or even beat inflation and help you reach your long term financial goals, but it’s important to understand that, in order to do this, you are introducing the risk of loss to your money.

When you invest, you encounter what is known as a risk/return pay off. Traditionally, the greater the risk you take with your money, the greater the potential for growth.

But, with this, comes an increased chance of losing your money. Before even considering investing your money, you need to be fully comfortable with introducing the potential for loss.

No investment is risk free and if you simply can’t reconcile that there are no guarantees with investment and that you could, potentially, lose some of your money, you are not ready to become an investor.

When making financial decisions, it’s important to consider the five steps below before you do anything with your money.

Once you know what your goals are, work out how long you need to achieve them. This will give you a clear idea of the kind of rates of return that you’ll need from your investments and whether or not your goals are realistic.

Factors like your age and health are important to consider. If you have short-term goals (less than five years) you should stick to cash savings. A Best Rate cash ISA is perfect for this but don’t invest – if your investment falls you might not have time to recover your losses before you need the money. Check out how to find the best cash ISA, Medium (five to 10 years) and long-term goals (10 years or more) are appropriate for investment, but some investments become less appropriate the older you get. You have less time for your money to recover if it falls in value and, if you’re retired, your capacity to earn is diminished.

Be realistic about how much you can afford to invest. Assess all of your liabilities, like debts, insurance premiums, pension contributions, savings and living costs, to see how much spare cash you have to invest. Remember that investment is long term and you should avoid having to access the money you’re investing, as it may not reach its full potential if you do.