For years, I shunned investing and stuck to cash savings accounts.
This wasn’t because I didn’t understand the merits of investing — I wrote about funds and shares every day and kept a keen eye on my pension.
But my savings goals, which included a house deposit and a wedding fund, always seemed too short-term to take the risk.
Taking her own advice: Money Mail editor Victoria began investing in the stock market after the pandemic sent already rock-bottom savings rates plunging even further
After all, experts warn that you really need to commit to investing for at least five years to ride out any bumps in the stock market. And, knowing my luck, my investments would probably crash just as I needed to make a withdrawal.
So I played it safe with a mix of cash Isas, regular savings accounts and Premium Bonds.
Yes, even the best available rates were terrible, but at least I knew I could get my hands on my cash whenever I wanted it.
Then the pandemic hit and rates plunged even farther.
My favourite regular saver went from paying 5 per cent to just 1 per cent, and my top online account, which had launched with a rate of 1.5 per cent, now paid a miserly 0.4 per cent.
Meanwhile, like many people, I found all the lockdowns meant I had more disposable income than I was used to (it’s truly horrifying how much I spend in the pub).
Suddenly, I was painfully aware that if I didn’t act fast, the purchasing power of my growing nest egg was going to be decimated by inflation.
So I took the plunge and finally started saving into my stocks-and-shares Isa in earnest.
And just over a year on, my only regret is not starting much sooner. Well, that and a foolish error when rushing to buy some shares, which meant I paid so much in fees I’m still down now, even though the company itself has performed well recently.
For the record, that was my only dabble in shares. And going forward I will almost certainly be sticking to funds, which spread the risk by investing in a range of companies.
But hindsight is a wonderful thing, and what pleases me most is that the best lesson I have learned over the past 12 months is one we regularly tout in Money Mail. And that is to drip-feed small amounts into your account each month. It may sound dull, but this has truly done wonders for my returns — which are tax-free courtesy of my Isa.
This is because regular investing helps smooth out the ups and downs. If your fund falls in value, you get a bargain that month, and if it is up… well, happy days, it’s up.
You can also invest smaller amounts this way, which is useful if, like me, you don’t have piles of cash in the bank.
Setting up a direct debit means you never need to worry about trying to time the market or remember to invest that month.
I found the biggest challenge was working out which of the many, many funds and investment trusts out there to back.
For a jargon-free jumping-off point, I’d (of course) suggest reading newspaper personal finance sections, such as Money Mail, where experts tip funds worth a look.
Investment platforms, such as Hargreaves Lansdown and AJ Bell, also have useful suggestions.
The key is to mix it up. Fund names often don’t spell out where your money is going (LF Blue Whale Growth, I’m looking at you) so check their top ten holdings carefully.
You don’t want to be too heavily invested in one sector, such as technology, or you risk seeing a lot of red minus numbers appear in your account if it has a bad run.
And watch out for fees. The more exciting active funds, run by star managers, can be much pricier than those that simply track a market — and they don’t always perform better.
So how did I do? After a year of regular investing, I’ve made a modest 9.61 per cent return overall, with my best-performing fund up 16.62 per cent.
While I’m clearly not the new Warren Buffett, I’m much better off than if I had stuck to cash.
That said, I haven’t given up on my Premium Bonds altogether. You always need some money set aside for emergencies — and I still have high hopes of meeting Agent Million one day.
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