Investing can be a great way to increase your income and build wealth for the future, but it can also be a daunting area to get started with and of course there is always an element of risk. These days, you do not have to be a financial expert in order to invest successfully and build wealth, so read on to find out how you can get started and a few of the best areas for investing for beginners.
Investing In 2021
Obviously, the pandemic has changed the investment landscape somewhat over the last year but this should not be a deterrent. Now could actually be a smart time to start investing as prices will be lower, the vaccine rollout is going well and life should return to some sort of normality later in the year and there is sure to be a boom as the economy opens up. The FTSE 100 could be work a look with Neil Wilson of Markets stating that “The FTSE 100 also has an expected 2021 dividend yield of 4%, making it the most attractive among developed market stock indices for income”.
There will also be certain sectors that could flourish as a result of the pandemic and now is the ideal time to invest in these areas. This will include sectors such as healthcare, technology, fintech, green technologies, electric vehicles and ecommerce. Of course, diversification is key when it comes to investing so it is smart to spread investments across different sectors and markets to reduce your risk.
The EIS Scheme
For a beginner, the Enterprise Investment Scheme could be a great way to get started with investing and to build wealth while supporting UK-based SMEs (who are said to be key in the economic recovery from the pandemic). The EIS scheme was introduced in 1994 by the government to encourage investors to invest in the funding of SMEs through tax advantages. These SMEs are a vital part of the UK economy but often struggle to secure enough funding, so the scheme helps these businesses to secure the finance that they need while allowing investors 30% income tax relief on investments up to £1 million.
The EIS scheme is perfect for those getting started with investing and looking to build wealth over a long period. As long-term investments, there is risk and it will not be suitable for all and it is recommended that you speak to a financial advisor to determine whether or not this is the best type of investment for you. Typically, people hold their EIS shares for at least 4 years so you will need to think about the money that you invest.
Investing might be daunting to get started with, but it is also an incredibly effective way to build wealth and improve your financial situation especially when planning for the long-term. Now could be a great time to get started with investing and you should consider the EIS scheme as a way to support UK SMEs who will play a pivotal role in the economic recovery.