3 simple things to do before you invest in the stock market

August 27, 2014

With interest rates on saving accounts still looking fairly abysmal, you might be considering trying your hand at investing in the stock markets. Before you start, there are a few things you should do.

1)    Pay off any short-term debts

Before you start investing, make sure you pay off any credit cards, store cards, personal loans or overdrafts.

It’s fairly obvious, but chances are you’ll be paying quite high levels of interest on these short-term debts. There are no guarantees that the return on whatever you invest will outstrip the interest you’ll be paying on these debts. So avoid wasting your efforts by clearing everything down first. You’ll then be starting from a stronger position.

2)    Make sure you have an emergency fund

You can’t predict the future. That’s why it’s important that you have an emergency fund which you can access immediately. Whether you suddenly need to replace your boiler, pay an unexpected vet’s bill or, heaven forbid, you lose your job; you need some cash in hand.

How much you need will vary depending on your circumstances. Three month’s living costs is a reasonable guide. But if you have children, for example, it will be wise to have closer to six month’s costs set aside for the added peace of mind.

If you’re keen to get started on the stock markets, saving up this buffer first might seem tedious, but heed this advice and you’ll thank us for it in the long run.

3)    Get some advice

The world of stocks and shares can be complicated and confusing. Before you dive in, it’s a good idea to get some advice from an expert. Whether they handle all your investments for you or simply point you in the right direction, getting off on the right foot will prove invaluable.

And a final word of warning. There are no guarantees when you invest in the stock markets. The value of your stocks can go up as well as down. You may need to stay in it for the long haul to see a good return, so just bear that in mind when you decide how much to invest.


This article is for general use only and is not intended to address your particular requirements. It should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

GreenSky Wealth Ltd is an appointed representative of Financial Limited which is authorised and regulated by the Financial Conduct Authority. FCA No: 516410