Why You Should Be Investing as a Young Professional and Our Top Tips

February 20, 2020

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. The value of your investments can go up as well as down, so you could get back less than you invested.

Young professionals, are you getting your career off the ground? It’s probably your main focus right now, good for you! We just wanted to let you know that now is the perfect time to start investing some of your hard-earned money and get it working for you.

Despite the obvious benefits of investing, there is a list just as long of excuses why people aren’t doing it. Whether you think you don’t have time, knowledge or spare cash to jump into the world of investing, read on and we’ll try to convince you that NOW is the time to begin your investment journey!

If you missed it, check out our convenient financial checklist for when you’re in your 20s.

Why aren’t young professionals investing?


One of the most common excuses we come across is ‘I just don’t have the time’. We get it, the modern world is a busy and exhausting place. If you’re also getting stuck into a new career you may be working long hours and free time is at a premium. Sitting down to plan your finances in any down time you do have is probably less than appealing. We bet you’d rather just go to the pub and have a beer with your mates, we’ve all been there.

It’s true, creating a killer portfolio that works for you can take a lot of time. There are factsheets to wade through and stocks to monitor. Investing some time in research, though, will pay off. A little time spent now can really benefit you in the long run – helping you to live a financially comfortable life that so many people strive for.

If you still think you don’t have the time to do it, find yourself an independent financial adviser. We will delve into this one a little further on in the article.


The risk element of investing can also put people off. Yes, investing does come with risk, there’s no way of avoiding that, but with a little risk you may make substantial gains. In fact, investing is the only way you can keep up with inflation. Did you know that, on average, inflation cuts 2.5% off the value of your savings every year?

We would argue that the biggest risk is, in fact, not investing at all!

Lack of knowledge

You may have heard of investing, and have a general idea of what it’s all about, but would you feel confident to step into the world of markets alone? The answer is probably ‘no’. In recent generations there has been a marked lack of basic financial knowledge.

Even those who have had to be financially independent thanks to a university education or a desire to make their own way in life can still be confused by saving and investing. The less you understand about the stock market, the more daunting it is likely to be.

Top Tips for starting your investment portfolio

 Luckily, there are a number of tips that can help get a portfolio up and running. We have written before about how to avoid common investing mistakes, but today we’ll take a look at some top tips to help you get your portfolio up and running.


To feel confident in your investment portfolio, you first need to know what the purpose of it is. Take time to follow the below steps before investing any money and you’ll be on the right foot from the off.

Set clear goals

Before you even begin researching where to invest your money, you need to know what your long-term plans are. Knowing these and setting goals will help work out your investment strategy.

Generally, people will have a short, medium and long-term goal:

  • Short term, you could be looking to get a foot on the property ladder
  • Medium term, you may want to pay for future children’s university
  • Long-term, you’ll probably want to be saving for your retirement

The longer your timeframe, the easier it may be to ride out any downturn. This is why it’s sensible to start your investment journey early.

To help you develop a realistic time frame, take the following factors into consideration:

  • Your income and how much of it you can afford to invest every month
  • Appetite for risk
  • Your timeframe
  • Your attitude towards impact.

Get your finances straight first

Before you invest a penny, make sure you are in a comfortable position to do so. It’s best to pay off any high interest debt you may have, such as car loans or credit cards. These interest rates are likely to be much higher than the interest you earn on savings and investments, therefore, it’s sensible to rid yourself of such debts first.

Once you’re back in the black, concentrate on building up a chunk of cash as a savings buffer. Aim to have enough cash that is easy to access for between three and six months of expenses. Having a buffer to fall back on will act as protection should anything happen.

Only then, can you move on to investing some money.

Build your strategy

 To get the best returns from investing, early and regular contributions are key. Investing a percentage of your wage every month should become a habit. I’m sure I don’t need to tell you, the longer your money has to grow, the better.

Drip-feeding your money into your funds may help to smooth out any highs and lows. Don’t attempt to second guess the market – it simply won’t work, and you could end up losing more than if you had stuck to drip feeding.

Stock up on ISAs (within your allowance, obviously)

A really easy way to invest your money is to make the most of your ISA allowance. You can save up to £20,000 each tax year in an ISA. Choosing a stocks and shares ISA will help you on your way to your investment goals.

It’s simple enough to do, first choose a platform to buy your ISA from and then decide which funds to include. There are a whole host of options, ranging from do-it-yourself platforms (which are best suited to those who know what they are doing) through to do-it-for-me platforms suited to those who aren’t confident on making investment decisions themselves.

Bear in mind that there is a charge associated with both the platform and funds you choose so some research is required to find the right combination for you.

The benefits of an ISA

A stocks and shares ISA benefits from a tax-free wrapper. Any money made from selling holdings is Capital Gains Tax free. Equally your earnings are tax free too.

Remember, when it comes to ISAs, if you don’t use it, you lose it. So, you might as well use it.

Pensions pay

You could already be investing, without really realising it. It’s highly likely that you’re paying into a company pension scheme. The money you and your employer pay into the scheme is invested, accumulating over time until you are ready to retire.
There are two reasons why investing into a pension makes sense.
1. For every £1 you put into your pension, the government will pay in an extra 25p – so this is basically free money.
2. Gains made from your pension are Capital Gains Tax and Income Tax free.

You can save up to £40,000 a year into your pension, tax free. Any unused allowance from the past three years can be carried forward too.

Alternative tax efficient options

Maxed out your ISA and Pension allowances but still have funds to invest? Lucky you! You could consider taking a look into Venture Capital Trusts and Enterprise Investment Schemes. These schemes are also tax efficient and typically involve investing in small and unlisted companies.

These types of investments usually lock in your money for a set time period, or until they mature. Therefore, they are only suitable if you won’t need access to your money for a while. Venture Capital Trusts and Enterprise Investment Trusts are a high-risk investment option, so financial advice is always recommended before committing.

Venture Capital Trusts are high risk investments and there may be no market for the shares should you wish to dispose of them. You may lose your capital. 

Enterprise Investment Schemes are very high-risk investments. They are usually concentrated in one single unquoted trading company. Often there is no market for the shares and it may therefore be very difficult to make a disposal. There is a strong possibility of the chosen company failing.

Find an Independent Financial Adviser

If you take one piece of information away from our article, let it be this: get yourself an independent financial adviser (IFA)!

I know, I know, we would say that as we are, in fact, top-notch Independent Financial Advisers. Believe us when we say, though, managing an investment portfolio takes time and benefits hugely from experience.

Ask yourself these questions:

  • Would you feel confident that you could diversify your portfolio? Could you identify the best funds in each sector to make sure it is correctly balanced according to your level of risk?
  • Do you even know your level of risk?
  • Do you have the time to keep on top of any changes in the funds?
  • Would you know when, or how to rebalance your portfolio?

If you answered ‘no’ to any of those questions, you should definitely get chatting to an IFA.

How will an IFA help?

An IFA will assess your financial situation and recommend a portfolio to suit your situation. They will manage the portfolio for you which takes a weight off your shoulders. You can go ahead and start earning from your investments without having to lift a finger – smart! You, reader, you will go far.

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. The value of your investments can go up as well as down, so you could get back less than you invested.