Before diving into the world of investing, it’s important to pause and reflect on whether it’s right for you. Investing can be a powerful way to grow your wealth and achieve your long-term goals, but it’s not a one-size-fits-all solution. Whether you’re considering it for the first time or revisiting your options, this checklist will help you determine if investing aligns with your current financial situation, goals, and mindset.Let’s find out if you’re ready to take the next step.
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1. Have you paid off short-term debts?

If you have short-term debts that are costing you money, you might consider paying off these before you start investing. Think credit cards, payday loans, store cards or any overdrafts.

While the return on your investments could be more than the interest you pay on debts, it’s generally a good idea to pay them off first, as circumstances can change.

Bear in mind, longer-term debt like student loans and mortgage aren’t considered here and a solid investment strategy could actually help you pay these off faster.
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2. Do you have money for a rainy day?

We’d always suggest you have some cash savings available should the unexpected occur. This is known as an ‘emergency fund’. The amount depends on your personal circumstances, but typically this should be around three to six months of living expenses.

This can cover anything from losing your job to those unforeseen events like a boiler replacement or your car breaking down.

It’s best to keep these funds somewhere you can access them immediately should you need to, while earning yourself some interest in the process.
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3. Do you have any big life events coming up in the short-term?

It’s important to think about your personal circumstances when it comes to investing. We see investing as long-term (think 5-10years down the line) for goals like a passive income, children’s education and retirement. This timescale gives your investments the best chance to grow.

If you’re looking at putting a deposit down on a house next year, getting married or paying for a holiday then you’re going to need ‘liquidity’ for your money to access it when you need it. An easy-access savings account is usually a more appropriate choice.

Remember, never invest any money you need for day to day spending, mortgage, rent or bill payments.

4. Are you comfortable with risk?

This is the big question. All investing comes with a degree of risk, and it’s important to understand and be comfortable with that before you start. In general, the higher the risk, the greater the potential return, but with the increased risk you may get backless than you put in.

How much risk you want to take depends on your personal circumstances, including your financial situation and your goals. All the funds we offer are given a risk rating so you can decide what’s right for you.

Risk shouldn’t necessarily be seen as a bad thing, more an opportunity, but you need to be prepared to face it. The biggest risk could be not taking one, as inflation tends to erode the value of your cash over time if you do nothing.

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Did you answer yes?

If you've answered yes to all these questions, then now could be the time to start your investing journey.By starting today, you’re taking control of your future and setting yourself up for lasting success.

Teaming up with industry leaders like BlackRock and Vanguard, Chip brings you a curated range of investment funds to build a ready-made portfolio right off the shelf in minutes, with popular index funds and themes to suit all appetites.

Now let’s get your money working.

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All the best,
Stephen

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When investing, your capital is at risk. The value of your investments can go down as well as up and you may get backless than your original investment. Chip does not offer financial advice and this should not be considered as a personal recommendation.