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Are you ready to invest?

Investing your money for the first time is a big step. In this guide, our experts will help you get off to the best start.

In this article
Pay off any debt Get protected
Think about retirement Make sure you’ve got savings

Low interest rates on cash savings since the financial crisis have meant that many savers have turned to the markets in the hope of achieving a better return. 

Investing means taking risks with your money. This is not necessarily a bad thing – more risk could mean better returns  – but if you are going to invest you need to be prepared for the fact that you could lose some, or even all, of your savings.

Before you do invest, it's crucial to assess your finances and make sure that you have the necessary safeguards in place. 

In this short video, Which? Money editor Harry Rose suggests four things to consider as a starting point. 

Pay off any debt

Make sure your debts are under control. The cost of your debt – in interest payments – is likely to outweigh the returns you receive from investments.

Focus on reducing debt to levels that are comfortable to manage or, ideally, pay off all debt before investing.

Find out more: 44 tips to pay off your debt– the Which? guide 


Get protected

Make sure you are protected against the possibility that you have to stop working for an extended period of time. Check your sick-pay scheme at work to see how long you would be covered for and consider taking out income protection insurance if you are self-employed. 

Other insurance, such as critical illness cover, could also be an option if you have a mortgage or dependents, although this can be expensive.

Life insurance is an essential item you need to take out before investing, especially if you have a family. Your work may offer a death-in-service benefit but consider an additional policy, in case you change jobs or are out of work. 

Find out more: How to buy life insurance – here we explore all of the factors to consider when taking out life insurance 

Think about retirement

It's unlikely that the state pension will be enough to maintain your lifestyle in retirement. 

So it's vital that you start saving into a pension as early as possible. Make sure you're contributing to your workplace pension scheme or a private pension before investing any spare cash – pension savers benefit from employer contributions and generous tax breaks. 

Find out more: Pensions and retirement – get to grips with your options     

Make sure you’ve got savings

Have you got spare cash to fall back on? Before risking your money, you need some core savings – an emergency fund to cover unforeseen events. 

The generally accepted rule is to have at least three months' salary in savings before you invest. And make sure that these savings are in a high-rate savings account, by using our unique Which? Savings Booster tool.