How to improve your investment knowledge

2nd September 2020

The vast majority of investors want to improve their knowledge. In fact, according to research from Schroders, 97% of investors want to boost their personal finance know-how.

While a third wanted enough knowledge to comfortably make their own decisions, almost half wanted enough to be able to probe the advice they’re given. A further 17% said they wanted enough knowledge so they can confidently ask questions of a financial adviser.

Unsurprisingly, the volatility within global markets has focused the minds of investors. Half (49%) said they thought about their investments at least weekly, up from 35% before the crisis. With investment values falling in the short term and concerns about what the future holds, improving knowledge can help you feel more comfortable with market movements and planning for the future.

So, what can you do to boost your investment insight? Here are five steps you could take.

1. Read and listen to podcasts

Reading and listening to podcasts can be a great way to improve your basic knowledge and create a foundation to build on.

Online there’s a huge range of resources you can access. However, you should always make sure the information has come from a trusted source that can be verified, there’s a lot of misinformation and scams out there too.

Our blog includes a range of financial news and views that can help you get started. If you prefer to listen while you’re on the go, the Meaningful Money podcast covers a range of topics and is aimed at those wanting to improve their knowledge. Season two of the podcast is titled Investing 101 and covers a range of investing fundamentals, from why you should invest to understanding risk profiles.

2. Keep up to date with the markets

Make a habit of reading the financial section when you browse the news. Keeping an eye on the markets, how they move and what’s influencing them can boost your understanding of your own investments. Even just a glance each day can slowly build up your knowledge.

One important thing to remember here is that you should focus on long-term trends. Market updates will typically focus on what’s just happened, but you’ll need to put this into context with wider market movements.

3. Seek information on risk and volatility

Understanding risk and volatility when investing is important. Novice investors sometimes view these as the same thing, but they’re not.

Risk relates to the likelihood that the value of your investments will decrease. Higher risk products will typically offer an opportunity for higher rewards to compensate for this. But, while the potential returns can seem attractive, high-risk investments aren’t right for most investors. The level of risk appropriate will depend on your risk profile, which should consider many factors, from the investment time frame through to your attitude.

Volatility, on the other hand, describes an investment’s short-term fluctuations. These market movements can be easier to focus on, as you’ll see how they directly impact the value of investments. However, once again, it’s important to focus on the long-term trend and remember that short-term losses are only on paper until you sell assets.

All investments come with some risk and will experience volatility.

4. Don’t be afraid to ask questions

The world of investing can seem complex when you first start investing and it’s filled with jargon. If you’re unsure about something, ask. It’s a way to help build up your knowledge and fill in the gaps. Keep in mind where you’re seeking answers from, is it a reputable and trustworthy source?

One thing to be cautious of here is that the world of investment is full of opinion. If you ask, ‘where should I place my money?’ or ‘is now the right time to invest?’ to two people, you can end up with wildly different responses. Remember, your financial plan and long-term goals will play a role.

5. Speak to a financial adviser

Finally, working with a financial adviser can help you better understand your investments. While a third of respondents in the Schroders survey wanted to gain significant investment knowledge so they didn’t necessarily need to seek professional advice, it can still add value.

A financial adviser is on hand to answer your questions, from how your risk profile was calculated to what long-term investment gains mean for your lifestyle. As someone who is regulated and qualified, you know it’s information you can rely on. Even as your investment knowledge improves, a professional can provide another perspective and ensure your portfolio reflects changes, for example, when new legislation is brought in.

If you’d like to talk about your investments and how they fit into your financial plan, please get in touch. We’re happy to answer your questions and help improve your investment knowledge.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.