Now that you know a thing or two about investing, you may be wondering how on earth you can actually make investments.
As you can imagine, there are endless organisations that you can invest with as the industry is very competitive.
Your relationship with the organisation you invest with is very important as they will be taking care of your investments.
You need to be able to trust them a lot, so it’s always best to go with someone that is familiar.
Unfortunately, the finance industry attracts scammers and fraudulent companies, so it’s important to check that every company that you deal with is legit.
Companies that offer investing services must be registered with the FCA, the UK’s regulatory body. If they are not, then it should be a red flag.
Some of you may be thinking that it’s not possible to even fully trust the big companies, which is understandable. The finance industry has been working hard to improve it’s reputation.
For peace of mind though, if anything goes wrong with the company that you invest with, under British law your investments are protect up to the value of $85,000.
Investing is become easier and easier. In fact, you can probably open an investment account with your own bank.
From experience, banks tend to offer slightly higher fees than standalone investment companies.
To open an investment account with your bank, you could probably do it online or by going into your bank directly.
If you don’t want to invest with your bank, the best option is to try and find a brokerage firm.
The two most famous firms in the UK are AJ Bell and Hargreaves Lansdown. Please note that we are not recommending that you use either of these companies, instead you should do your own research.
When selecting a company to invest with, make sure that they are fully regulated and registered with the FCA.
If you want to invest in America, the most convenient way to do this is by investing in an index fund like the S&P500.
It’s more convenient as you don’t need to fill out any paperwork or deal with any foreign tax liabilities.
If you do want to invest in individual American stocks though, you need to firstly make sure that your broker offers such a service.
If they do, which most should, you’ll need to complete a form called a W-8BEN form, which basically allows you to buy American stocks as a foreigner.
You will pay tax in the United States if you buy individual stocks, which should be handled by your broker.
As soon as your W-8BEN form has been processed, you’ll be able to freely invest in the likes of Apple, Amazon, Google and more.
One important point is that you will have to fill out a new W-8BEN form every 3 years. If you fail to complete a new form, your broker will sell your stock automatically at the market rate.
Don’t worry though as your broker will usually tell you well in advance of when the deadline is. As long as you file the paperwork before the deadline, everything will go smoothly.
Aside from investing in America, many investors want to take advantage of other international markets like Asia, Australia or Central Europe.
Investing in China has become particularly popular but it is probably the most challenging country to invest in.
The reason is that the Chinese government don’t allow any money to leave China, so it can be difficult to sell investments in China. For that reason, many major Chinese firms actually listed in Hong Kong as well as in America.
Chinese giant, Alibaba, for instance, is listed on the New York Stock Exchange.
Different countries have different rules and some will be easier to invest in than others. Whether you will actually be able to invest in a country or not depends upon the options that your broker has.
A lot of the time, it is only possible to invest in a particular country with a set amount of money. For example, it’s often hard to invest in Japan with less than $10,000 per investment.
The easiest way to expose yourself to other foreign markets is to invest in index funds for each area.
Of course, you don’t have to invest in stocks, it is possible to make other types of investment.
If you want to purchase government bonds in the UK, you can easily do so with a state-owned organisation called National Savings and Investments – just simply search on Google.
If you want to invest in other types of bonds (i.e. corporate bonds), the best option is to find a broker that offers investment in bond markets.
If you want to invest in property without actually buying a property, you can do so by purchasing a security called a REIT, which is basically stock in a property company or a fund that delivers income from rental properties that are owned by the fund.
If you want to invest in antiques, fine wines or art, these types of investment are not recommended unless you are qualified as an expert in each field.
Any investment company offering the opportunity to invest in those types of commodities, should be avoided.
Finally, if you would like to buy gold or other previous metals, you can actually invest in funds that holds and buys gold.
You could also buy the gold yourself and store it in your house or you could use a reputable online dealer, who could manage your gold for you.