The investment market in the UK is huge, while it continues to grow and diversify at an incredible rate.
This is reflected by the growth of the nation’s ethical investment market, which is projected to reach a total value of £48 billion by 2027. Overall, this market will grow by 173% over the course of the next nine years, creating numerous opportunities for sustainable investment in the future.
This is one of many considerations that you’ll need to keep in mind when entering the investment market for the first time. Here’s a brief guide to help you get started:
- Understand your Own Investment Philosophy
We’ve already touched on the diverse nature of the modern investment market, and this means that there are various assets and financial instruments to choose from when building your portfolio.
The important thing is to create a portfolio that reflects your own unique investment philosophy, particularly your appetite for risk and underlying financial objectives. For example, if you have an aversion to risk and a desire to build incremental gains, you’ll be best served by investing in relatively secure stores of wealth that deliver frequent dividends.
Conversely, those with an appetite for risk will often pursue larger and shorter-term gains like with a Warren Buffett Portfolio, requiring them to back derivatives that can be traded on margin.
Either way, you’ll need to understand your philosophy as an investor and ensure that this informs every investment decision that you make.
- Strike the Balance between Instinctive and Deterministic Trading
While some believe that people should follow their instincts when investing, this can often lead to emotive and questionable decision making.
Ultimately, you’ll need to strike the ideal balance between trusting your instincts and maintaining a deterministic outlook as an investor. This means that you must always consider your gut feeling in the context of the wider market, and the underlying laws that govern price movements.
This will enable you to avoid hasty and knee-jerk decisions in volatile market conditions, which is increasingly important given the uncertainty created by Brexit and similar geopolitical disputes.
- Make Risk Management a Key Priority
Regardless of your investment philosophy, there is no such thing as a risk-free investment. This means that risk management should be a key priority when building and managing your portfolio, as you look to create a competitive advantage that translates into financial gains.
Online brokerage firms such as ATC Brokers can help in this regard, as they offer a number of features that help investors to mitigate their risk. For example, you can trade through a demo account when starting out, as you look to test and hone your strategies in a risk-free and simulated market environment.
Virtual trading platforms also include designated risk management features such as stop losses, which can be applied to open positions across a host of markets.
This feature establishes a loss threshold for individual investments, automatically closing the position once this limit has been reached.
