Now, my rule here is always only to invest money that you can afford to lose because you should still be aware that money can go down just as much as it can go up. Very, very easy to make a wrong decision and lose your money. But if you continue watching, I’ll explain how I avoided these bad decisions where possible. But I do urge you, don’t watch this and think it’s too risky, and then flip over to the next video, unless you’re watching this video, which is where I talk about some less risky ways’ve invested my money over time. But overall, I’m called a long investor, which means you invest in something for the long run, and you’re not put off by the daily ups and downs that the stock market has. And yes, this does mean that some mornings, you’ll wake up and see that the money you invested yesterday is now worthless, but you know that over time, this won’t matter, because, fast forward to a month or a year from now, and the chances are highly likely that you’ll be in profit.
Still with me? Let’s continue. So the first thing you need to get started with investing your money is to sign up to a place where you can invest, and here in the U.K., that means somewhere like Trading 212 or Freetrade, and in the U.S. that’s probably likely to be Robinhood. Since I am in the U.K. and Robinhood have yet to make their way over here, I have accounts with Trading 212 and Freetrade. Now, I don’t have anything to sell you here, and there’s no investment course, but if you are going to sign up for Trading 212 or Freetrade, then if you follow the links in the description down below, both you and me will receive a free share in return. No idea what that will be, but, hey, an open share is just free money. For me, I do most of my trading with Trading 212, but I do have a Freetrade for some other trades that just spread my investments out. Following that, only some primary admin to start with.
Guaranteed to get Your Money Back
So both trading Trading 212 and Freetrade are as safe as most banks in that any money you invest with them up to, I think it’s like 85,000 pounds, is protected with a guarantee from the FSCS, which means if the bank or the company were to go bankrupt, then you would be guaranteed to get your money back. But I will reiterate that the likelihood of that happening is very rare, as rare as one of your high street banks goes bankrupt. I have significant amounts of money invested in both of these types of accounts, and I have both transferred money in and out of these apps without any issues. And then secondly, with Trading 212, they have three different types of investment accounts. ISA, Invest and CFD. ISA is by far the best, and the first one you want to set up.
Here in the U.K., you can invest up to 20,000 pounds every year, and when stored in ISA, then any profit you make from those investments are 100% free from any form of tax. Next, we have Invest, which is the same as ISA, except that you are taxed on any profits you make this time. Now, when I say you’re taxed, nothing happens to your money. Money isn’t taken away from you, but you do need to let HMRC know if you make any significant profits, so that good old Her Majesty gets their cut of your money once again. And lastly, we have CFD.
How to Open a CFD Account
Please listen carefully. Never, and I mean never, open a CFD account, not unless you’re super skilled and know exactly what you’re doing, because CFD is how Trading 212 make their money, and it’s just like a casino, where people are putting money in the bets, but most of the time they lose. So just, please, don’t put your money into CFD.
With that out of the way, let us continue with the real advice. Firstly, sign up for a Trading 212 account and a Freetrade account if you want to benefit from getting those two free shares by doing so. There’s no massive difference between them, but I prefer Trading 212’s layout. Fund your account with whatever you wish. If you’re not sure what to start with, then I suggest with maybe 100 pounds, or if that’s too rich, then perhaps 50, or 10 pounds is still a great place to start. To do this, you tap at the number at the top here, tap on Deposit Funds, and then you can throw in your card details, do a bank transfer, or use something like Apple Pay. And I found the instant bank transfer and debit card payments just so easy to use.
So pick what works for you, and move on. So now you have your trading app and trading account set up, the next question is, what do you invest in? And my advice here is one of two things. Number one is to invest in blue-chip companies. What are the blue-chip companies? I hear you ask. Well, they are the big corporate businesses who stood the test of time. We’re talking like Microsoft, Apple, and IBM, those big companies who’ve been around for decades and decades, never skipping a beat. Even amidst the most difficult financial times this world has seen so far, with COVID, these stocks have rallied to all-time highs, which is just insane. Number two is to invest in companies where you love what they do.