How to choose your first investment

Find out some ideas for your first investment and what to consider.

You’ve decided you’d like to start investing, you’ve got yourself a handy share-trading app and you’re ready to go, but what do you invest in? Some platforms have more than 6,000 investments to choose between, so it can be a little daunting trying to choose just one of them to start creating a portfolio. Here’s how to narrow down your choices.

Don’t put too much pressure on your first investment

Like many first-times, your first investment doesn’t need to blow your socks off. Choose something that you think you’d like to buy and invest a small amount into it — the idea is to fully grasp the options that will come up when you buy and sell and understand what they all mean.

Try to understand the order types, but leave them alone for now

There are a few different types of order. For your first investment, it’s a good idea to place a basic order. Once you’ve given it a go, you can read about the different types of order and fully understand how they work.

If you want to try out these order types, you could look at platforms with a demo account (we love eToro and Trading 212’s demo accounts). These let you invest with virtual funds and they mimic the real movements in the market.

Ideas for your first investment

Choose a company you know (and love!)

This is pretty simple — look around you. The company that makes your phone, your favourite cereal, your hair products, your car, your morning coffee stop, — it’s likely that they’re all publicly traded or owned by a publicly traded company. Your first investment could be one of these. It doesn’t have to be a lot of money and you certainly don’t have to hold it for very long, but it gets your foot through the door.

Invest in a fund or exchange-traded fund (ETF)

This sounds a lot more complicated than it really is. A fund is a collection of investments, sometimes based on the sector they’re in, the country they’re based in, company size or how they score ethically.

Exchange-traded funds are simply funds that are listed on stock exchanges. You could choose a fund or ETF in a sector you love, like technology or farming, or you could choose one that aligns with your values, like a vegan or climate focused ETFs.

If you’re still not sure, consider a ready-made option

Ready-made portfolios are offered by robo-advisors and some share-dealing platforms. They’re similar to funds, except they’re really well diversified, so you don’t need to choose more than one, and they’re fully managed. You often choose these based on how you feel about risk. You could invest in ready-made portfolios as well as purchase a few shares.

What’s next?

Now you’ve chosen an investment, you can make an order. With most investment platforms this can be pretty straightforward, but with platforms that have more on offer, it might not be so simple.

Look out for a “basic order” or a “market order”. Our guide on how to buy shares gives more detail on the process.

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

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