Remember the basics:

1. There is no gain without pain – You have to move out of your comfort zone to achieve things in life. Similarly, you have to venture beyond cash savings in the bank.
2. Keeping all your money in a savings account is like going at 10 miles an hour – on an empty motorway. It will get you nowhere.
3. You are saving and accumulating for later years (10 – 20 – even 30 years).
4. Do not confuse volatility with risk (permanent loss of capital).
5. Equity markets are volatile but that should not worry you if you are a long-term investor. Be prepared to withstand short-term losses for long-term gains. Ships are safest in the harbour (rather than the seas) but that is not where they are supposed to be!
6. Having said that, create a portfolio based on your own personality.
7. Under all circumstances, stay away from fad.
8. Diversify your portfolio, no matter how attractive a particular share or fund is.
9. If you have a choice of investing in a lump-sum vs investing in monthly installments, prefer regular monthly (or even weekly) installments using direct debits, avoiding yourself the hassle of doing bank transfers (and giving yourself an excuse to procrastinate).
10. Most investors invest when the mood is “good” which means they invest when the price is high…. and sell when the price is low. Do the opposite.
11. Have patience and be disciplined.

Patience is the key! The power of compounding only works if you stay invested for a long time. Remember it is ‘Time in the Market’ not ‘Timing the Market’.

Making the most of Tax-Free Savings and Investments

• If you don’t pay tax, then there is no advantage in opting for tax-free investments. But if you are a tax payer or aspire to be one in the future (it is a privilege to pay tax), then invest in tax-free wrappers such as ISA and SIPP;
• If you are in the UK, take full advantage of your annual ISA allowance – currently £20,000 per annum;