Venturing into the world of investing can be daunting, especially for first-time investors who fear losing money, therefore, venture capital group Oxford Capital have shared insight on how novice investors can experiment with small investments before committing on a larger scale, and provided actionable tips on how to maximise investments.
Mark Bower-Easton, Head of Distribution at venture capital group Oxford Capital, shares his thoughts on how to experiment with small investments:
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Research
“If you’re new to investing, start by learning the basics and getting familiar with how the market works. Take time to read about how different investments grow your money, and stick to trusted sources for advice. The more informed you are, the better your decisions when deciding which stocks to invest in, even at a smaller scale.
Experimenting with small investments will not just help you to familiarise yourself with the market, but also help to avoid common mistakes that novice investors tend to make. Once you have gained enough experience and experimented via investments, you can then look toward a fund that will manage larger, more complex investments which can generate higher returns.”
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Consider an Investment Manager:
“Partnering with an investment manager can take the stress out of investing, especially for beginners who may feel overwhelmed by the process. An investment manager creates personalised portfolios tailored to your financial goals, risk tolerance, and time horizon, ensuring your investments are aligned with what you want to achieve.
Beginners can ensure their investments align with their needs without requiring them to navigate complex decisions alone. They handle the complexities of choosing the right mix of stocks, bonds, or funds, freeing you from making tough decisions alone. With their deep market knowledge and years of experience, they apply strategies that have been tested and proven to work, helping you avoid costly mistakes and make steady progress toward your goal.”
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Utilise Micro-Investment Platforms:
“Many platforms offer micro-investment options that allow you to start investing with minimal amounts, as little as £10, making it easier to start small and build up your confidence. For example, Robo-Advisor platforms such as Betterment and Wealthfront offer automated investment management services tailored to each user’s financial goals and risk tolerance. With low minimum deposits, these platforms provide a simple way to build a diversified portfolio by investing small amounts in early-stage companies, without requiring much financial knowledge. These platforms also offer the ability to invest via fraction shares (investing towards a stock and owning part of the share), making investing more accessible to all individuals.”
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Diversify Early
“Even when starting small, it’s important to spread your investments around—a concept called diversification. This means putting your money into different industries, types of investments, and even countries so that if one doesn’t do well, it won’t impact all your savings.For example, you can invest in funds like ETFs (Exchange-Traded Funds) that include companies from around the world, letting you benefit from global economic growth. A good mix might include stocks, which can grow your money faster but are riskier, and bonds, which are more stable but grow more slowly. Balancing these helps protect your investments while still giving them a chance to grow.”
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Measure and Reflect:
“It is important to track all small investments and analyse your performance. This data will help identify patterns, improve decision-making, and decide where to allocate larger investments in the future.The first step to measuring your investments is setting up a system to track their performance over time. Many platforms like Robinhood, Acorns, or Stash offer easy-to-read dashboards that display key performance indicators, such as portfolio value, individual investment growth, and overall returns.
Lastly, reflection is an essential part of the learning process for any investor. After reviewing investment performance, consider why a certain investment underperformed, or what triggered a specific market change. Reflecting on these questions will provide insight into your decision-making process, allowing you to adjust your strategy moving forward.”
Tips to maximise investments, according to Oxford Capital:
Reinvest Earnings: “One of the most effective ways to grow your investments faster is by reinvesting the money you earn from them. For example, if you receive dividends (a share of a company’s profits), you can use them to buy more of the same investment instead of cashing them out. This approach, called reinvesting, helps your money grow on top of itself over time. It works best with investments that grow steadily, like index funds, which are known for providing consistent returns. Over time, this simple strategy can help you build wealth much more effectively.”
Commit to a Long-Term Strategy: “Furthermore, boosting returns isn’t just about identifying the right investments—it’s also about maintaining a commitment to your long-term strategy. Investors who stick to their plans, even during periods of a weakening market, tend to see better outcomes over time. This means resisting the temptation to react emotionally to market swings or shifting strategies too frequently. Considering novice investors will carry out huge amounts of research, sometimes, investors just need to trust the process and commit to their strategy over the long term.”
Once Confident, Broaden Investments: “After gaining experience and building confidence in smaller investments, consider exploring larger, more complex funds as your capital grows. These funds often pool resources from multiple investors, allowing for diversified portfolios managed by expert fund managers. By transitioning to these investments, you can access opportunities in sectors or markets that may have been previously out of reach. Start by researching funds aligned with your financial goals and risk tolerance. With professional management and diversification, these funds can help maximize returns while balancing the complexities of a growing portfolio.”