Many people are put off from investing because they think it’s too risky.
But we take risks every day in life and often make conscious decisions about what we do and don’t do, depending on the chance of something going wrong or the potential reward we’ll get.
So rather than just ruling investing out because you think you might lose money, it’s worth taking some time to understand how likely that is and what you can do to take a level of risk you’re comfortable with.
There’s no getting away from the fact that you could lose money if you invest because stock markets fall as well as rise, but there are things you can do to reduce the chance of this happening.
And if you’re not too worried about risk and stock market movements you might be happy to take quite a lot of risk in the hope you’ll get better returns.
The key is investing in a way that you’re comfortable with.
So what are the main things to bear in mind?
Firstly, remember when it comes to where you keep your hard-earned money, there’s no escaping a degree of risk.
Even keeping it all in a cash savings account isn’t risk-free.
You won’t actually lose money, but its spending power can fall over time if the rate of inflation is higher than the rate of interest you earn.
Secondly, whatever level of risk you’re comfortable with, a diversified portfolio is what you should be aiming for.
If you only buy shares in a single company – which is what many people do, especially when they’re starting out – your returns are entirely dependent on the successes of that one company, which makes it a high-risk strategy to take.
A lower-risk approach is to invest in funds.
With a fund your money is pooled with that of other investors and then invested in a number of different companies, giving you that all-important diversification.
This doesn’t totally eradicate risk – but the diversification helps to spread it.
You can create a balanced, diversified portfolio by putting your money into funds that invest in different types of companies and different areas of the world.
That way they’ll all perform differently, so if some of your investments are struggling, you’ll hopefully have others that are doing well.
You don’t need to pick a large number of funds at the outset – you can build your portfolio of investments over time.
One year you might choose a UK fund where your money is invested in a collection of UK companies.
The year after you might go for a European fund, US fund, a global fund, or one that invests in Emerging Markets and so on.
You can also invest in funds which focus on specialised sectors, such as technology or healthcare.
Once you’re ready to look at investment options, we offer different ways to invest which allow you to be as hands-on or as hands-off as you like.
Barclays Ready-made Investments (RMI) is a range of diversified funds that invest in different types of assets – shares, bonds, and cash – and different regions.
All you need to do is select the level of risk you are most comfortable with.
If you’re new to investing, these funds can be great as they offer a simple way of getting started and provide you with immediate diversification.
They’re not only for first-timers though – Ready-made Investments are also useful if you’re short on time or would prefer to leave the task of selecting funds to the professionals.
If you prefer to select own investments though, the Barclays Funds List is a great option.
Our list is made up of several funds from each of the investment sectors we believe are key for building a diversified portfolio.
There’s plenty of information on each fund and its objectives – what it is and what it aims to do.
So, whether you want to do it yourself or leave it to the experts, there’s hopefully a solution to suit you.
The key is to decide how much risk you’re comfortable with before you start.