I’m a control freak. It isn’t my most endearing quality, but it does mean that when it comes to things such as life admin and money matters, I try to heed the girl scout motto and be prepared for every eventuality. But, for some reason, I’ve never tried investing before.
I’m lucky enough to have a few work-based pensions, which will apparently provide me with a grand sum of £365 per month to help me heat my home and fill my shopping trolley, once I’m of retirement age. And because I’m constantly thinking and worrying about the future, whenever I’ve found myself with any financial headroom, I’ve been diligent about saving.
At the moment, though, I’m finding that, week-by-week, I’m just getting by. I work for a website part-time and my husband is in the luxury goods market, which has been hit by the recent economic uncertainty. Plus, our cost of living just seems to keep on rising – our car, our kids’ after-school clubs, even our cats seem to be getting more expensive.
The money we managed to save when things were better was bolstered by some redundancy money I was paid four years ago and also by my husband’s PPI payment. But it’s just sitting in a savings account earning a paltry 0.35% interest, which annually earns us just £60.
So I’ve decided to try to improve our financial future by dipping my toe into the big wide world of investments. This is completely new territory for me. My only experience of investment pretty much extends to watching Damian Lewis in Billions. Indeed, when people tell me that they “invest”, I can’t help picturing a 1980s yuppie in pinstripes and braces, shouting “loadsamoney” into a brick mobile phone. Can this really be for me?
I start researching investments online: the words float across the screen like a different language. I wonder to myself why I’ve never tried investing before? Perhaps it has something to do with my control-freak tendencies? And yet, deciding to invest actually feels like taking control. So, undeterred by some of the jargon I encounter online, I take £1,000 out of our stagnant savings and resolve to try and make it grow. Watch out Wall Street, this twice failing maths GCSE pupil is coming for you.
No matter how much I psych myself up, however, the shameful truth is I still have no idea where to really begin. So I turn to my bank, HSBC, and phone its investment helpline. I kick off my chat with the super helpful specialist by asking her to explain everything as if she’s talking to a five-year-old. I tell her I have £1,000 to invest, where do I start? (Though it’s worth noting that you can start investing in some places from only £100.)
For a Joe Average like me, the specialist explains that this isn’t some get rich quick scheme, but instead to think about this for the long term – at least a five-year timeframe. Mentally, I start planning a family holiday to Disney World five years down the line. She then checks that I’ve got an emergency fund in place for dealing with any unexpected expenses. Next, we chat about how I might make the best decision for me, where I’d feel most comfortable putting my money and about the various investment options that are available. I make notes – lots of notes. It’s a lot of information to absorb, but once I have the basics, I hang up the phone and bolster what I’ve just been told with information from HSBC’s website, where everything is clearly covered. Then I phone back the helpline with further queries. This approach seems to work best for me, and gives me the best of both worlds: the personal touch over the telephone, plus the chance to supplement what I learn in my own time and at my own pace. Helpfully, everything I’ve discussed with the specialist is available online, including a timely reminder that, when it comes to investments, I may not get back what I put in – along with a brilliant jargon buster which has found itself a special place in my bookmarks toolbar.
I focus on three distinct investment options. The first involves opening an account to buy shares in individual companies – companies whose shares are publicly traded in the stock market. I keep visualising shares as if they’re slices of one giant pizza – the publicly-traded companies get sliced into so many pieces, and you then can buy a slice, or a few slices. Of course, it would have to be the world’s biggest pizza given the sheer number of shares that are typically issued. Plus, it starts making me hungry.
The second option involves putting your money into a fund-based investment. A fund is basically a group of investors who collectively put their money together in one basket, and that money is spread out, across a whole range of investments.
Thirdly, you can invest in a portfolio, which is basically a collection of different funds.
All of these options can also can be undertaken via a stocks and shares ISA (Individual Savings Accounts). The benefits of an ISA are that you don’t pay income or capital gains tax on what you earn, but you are limited to a maximum of £20,000 investment per year. You can split your ISA allowance between stocks and shares, and cash – a cash ISA being similar to a savings account that offers instant access to your money. A stocks and shares ISA could potentially earn you more money than the alternative, however, there is a greater risk attached, as your money is invested in stocks and shares, which can go down, as well as up.
As one of my cats peers over the top of my laptop, meowing for yet more food, she reminds me of all our day-to-day expenses and why I need to try and secure a better financial future for my family. Taking in two kittens from a cat shelter seemed like the best idea at the time, but I had no idea they’d bump up our monthly costs by a rather massive £100, for cat food, litter and insurance.
Now that I’m armed with decidedly more knowledge than when I started, I brew a strong cup of Earl Grey, crack open a packet of shortbread and mull over how I want to lose my investment virginity. I decide I don’t want any additional tax worries (who does?) which is why I’m going down the ISA route. I’m also looking for an investment that doesn’t require any work on my part, which is why I opt for something HSBC calls a “managed” solution, which means they take care of managing my funds and keep me updated in regular statements. I choose a stocks and shares ISA which invests in funds, rather than the alternative which invests in shares on the stock market.
For the final step, I go through an online process using HSBC’s My Investment tool, which involves answering multiple, intricate questions about my finances, assessing if I can afford to invest, and delving deeply into how I feel about risk. The depth of the questions reassures me rather than puts me off – and it’s been written in a plain, easy to understand language. The tool processes my answers and conclude that I’m a person who’s comfortable with risk – so I opt for the high risk portfolio it recommends.
The cost of setting up my ISA is £7.50 with an estimated* £4.50 per annum account fee. It’s been surprisingly straightforward and I bask in the positive feeling of having taken some control over my money. In fact, when I log in to my online banking app moments later, there sits my ISA account, holding my £1,000. I take a mental picture of the moment. After all, you never forget your first time.
*Calculated at 0.5% of the amount invested as an advice fee, and the remainder is for the fees on the fund
To invest or access investment advice through HSBC you must be and existing HSBC UK current or savings account customer. Additional eligibility criteria and fees apply
Thinking about your financial future might feel a bit daunting. But HSBC can help you to take that first step so that you can make better-informed investment decisions – whether you’re new to investing or more experienced. Find out more about how you can secure your financial future
The value of investments can go down as well as up. You could get back less than you invest. Fees and eligibility criteria apply
