At AllBright, we discovered that over half of our members don’t feel confident when it comes to investing their money. In fact, 67% of women don't invest, meaning 3.3 million fewer women than men hold investments. To help address this, we reached out to our community, gathered their most pressing investment questions, and posed them to Sam North, Market Analyst at eToro and host of the eToro Digest & Invest podcast.
Sam, who is passionate about helping others grow their financial knowledge and build wealth, recently hosted the Building Your Investment Portfolio workshop at the AllBright Townhouse, where he provided expert guidance on this crucial topic. He stressed the importance of diversifying the assets you invest in, for instance investing in a mix of stocks, bonds, commodities and crypto (i.e. not putting all your eggs in one basket!) He also explained that despite stocks always dropping and crashing, time can be on your side when it comes to investing. For example, $500 a month invested in 1982 would now be worth $3.3.million; though of course we must stress that past performance is not indicative of future results. We’ve included some of the questions that came up during the workshop too, for anyone who missed the session!
With the gender investment gap continuing to widen, it’s more important than ever to educate women on taking control of their finances. That’s why our Money Agenda pillar is dedicated to empowering women to own their financial futures. Let’s dive into your questions!
What three tips would you give for absolute beginners to the investment world?
Start small and diversify your investments across different asset classes to reduce risk. Take time to educate yourself about basic investment concepts, such as risk vs. reward and compounding. Lastly, be patient and think long-term, avoiding the temptation to react to daily market changes.
What are the most common mistakes people make when they start investing?
1. Timing the Market: Attempting to predict market highs and lows is nearly impossible—focus on staying invested long-term instead.
2. Chasing Short-Term Gains: Avoid reacting to market trends or "hot tips" that can lead to impulsive, poorly thought-out decisions.
3. Lack of Diversification: Concentrating too much in one stock or sector increases risk—spread investments across different asset classes.
4. Neglecting Regular Contributions: Skipping consistent investments or not reinvesting dividends can slow portfolio growth over time.
5. Emotional Decision-Making: Letting fear or greed drive your decisions often results in buying high and selling low, hurting long-term returns.
6. Overlooking Fees: High management fees and transaction costs can erode investment gains—be mindful of the impact of fees on your returns.
7. Not Reviewing Your Portfolio: Failing to periodically review and adjust your portfolio can lead to imbalances or misalignment with your financial goals.
How do you determine what your risk appetite is depending on your financial goals/situation?
Your risk appetite depends on your financial goals, time horizon, and personal comfort with market fluctuations. Long-term goals like retirement may allow for higher risk, while short-term goals might require more conservative investments. Additionally, your current financial situation and experience with investing will influence how much risk you're willing to take.
How do you balance investing with other financial commitments, such as debt or savings and other costs such as childcare?
Before focusing on investing, make sure to pay off high-interest debt and build an emergency fund with 3-6 months of living expenses. Once these are in place, create a budget that allows for regular investment contributions alongside other financial obligations. I would wait until everything is in order before investing, the markets will still be there once everything is sorted.
What things do I need to consider when opening an investment account?
Choose the right account type based on your goals—whether it’s for general investing, retirement, or education savings. Be sure to compare fees and commissions, as these can eat into your returns over time. Also, consider the platform’s ease of use, tools, and customer support to ensure it meets your needs.
How do you research and evaluate different investment opportunities?
To evaluate investments, start by understanding the fundamentals of the company or asset, such as financial performance and competitive position. Use a variety of resources, including financial news and expert opinions, to gain a well-rounded view. Lastly, consider both historical performance and future growth prospects, but remember that past results don’t guarantee future success.
How do my investments grow over time?
Through the power of compounding! Compounding allows your initial investment to generate returns, and over time, those returns begin to earn their own returns, accelerating the growth of your portfolio. An example of this is if you invest £1,000 at a 10% annual return, at the end of the first year, you have £1,100. In the second year, you'll earn 10% on £1,100 (not just the original £1,000), resulting in £1,210. This process continues, and the growth accelerates over time. The longer you stay invested, the more compounding enhances wealth growth, rewarding patience as even small contributions can lead to significant gains over decades.
How often should you review your investment portfolio?
It is a personal preference but I review my portfolio every 6 or 12 months to ensure it aligns with my goals and risk tolerance. Major life events or market changes may require you to adjust your investments but it is important to have patience at the same time and remember why you invested to begin with. Rebalancing your portfolio helps maintain your desired asset allocation, especially after market fluctuations.
What do you recommend for those wanting to invest consciously? Is there a filter for ESG companies?
For those looking to invest consciously, focusing on ESG (Environmental, Social, and Governance) factors can be a great approach. On eToro, you can use the platform’s ESG score to evaluate stocks based on their environmental impact, social responsibility, and governance practices, helping you align your investments with your values.
Investing is a key path to help women build long-term wealth and with the significant gender investment gap, eToro is encouraging us to just take the first step! eToro make learning the basics of investing easier with a virtual account. Practice investing and get to grips with different investment strategies without risking real capital by downloading the eToro app today!
This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication.
eToro is a multi-asset investment platform. Past performance is not a reliable indicator of future results. The value of your investments may go up or down. Your capital is at risk.
Disclaimer
AllBright cannot guarantee that all of the information provided in this video or article is accurate. Use the information provided on our website at your own risk. If you wish to make an investment you should seek independent financial advice before doing so, and ensure that you have carried out your own research on the product or company that you are investing in. Any advice provided is not tailored to anyone’s individual situation, as each individual is in a different situation. AllBright does not accept any liability whatsoever for any action taken or losses incurred as a result of the information provided on our site.