THE BLOG

Dear Young Investors

17/07/2015 15:31 BST | Updated 16/07/2016 10:59 BST

Earlier in the March of this year many individuals celebrated the fifth birthday of the bull market. Since the market bottomed out in March 2009 investors have seen NASDAQ rise upwards towards a gain of 275%, the S&P 500 has been seen to make gains of over 200% and the NYSE has made gains of 165%. Here in the UK the FTSE has made gains of 90% and only in April of this year did it break it's all time record high when it closed at 7,103.98. Ever since I was in my early teenage years I had watched the market and even had a go at a stock simulator to try my luck. For me, now was the moment to move from speculative spectator to an investor.

Interest rates at high street banks are not that great and having been brought up around finance and being well acquainted with the damage that the market crash of 2008 caused, for those who want to know more on that subject I suggest watching Charles Ferguson's Inside Job, I had always aired on the side of caution. But it is easy for caution to become hesitancy and now was the time to be decisive. I decided to invest some spare capital I had in the stock market, through some trackers that followed the market and a few managed funds, as surely I could beat the interest rates the banks were offering? And If I made a profit I got to keep it tax-free in my ISA and if I made a loss then it would have at least been an educational experience.

So what have I learnt from moving from being a speculative spectator to an investor? A few things actually, firstly to ignore the noise and think for yourself based on your research. After all, there is nobody else to blame. Another lesson the market teaches you it to be patient, some things take time and no amount of bullishness will get you there faster. The third lesson I have learned is that diversification reduces risk but does not remove it completely, if your not willing to commit to your portfolio through diversifying then, as Rob Russell says, "go to Las Vegas, you'll have more fun". One of the most important lessons I learnt, however, was from Warren Buffet, he once said "Our favorite holding period is forever", which taught me that investments are for long term.

There is no shortage of articles that seem to offer the advice that young individuals should not hesitate to save and invest, and only last George Osborne in his 2014 budget said that Britain needs to save more. One only need read the articles out there from the likes of Forbes, Business Insider and Investopedia on the matter to understand why we should be teaching young individuals like myself the benefits of saving regularly, what the benefits of using their ISA allowance are and how compound interest works and why it is important, as well as many other thing, these lessons and the ones that come with them, are invaluable.

But by no means am I suggesting that an individual should leverage himself or herself with debt to invest, in fact what I am saying is not intended to be seen as offering investment, financial, legal, accounting, tax or other advice at all. What I am expressing, however, is my belief that the benefits of saving and investing should be made more aware to students and young individuals. Every individual should always be cautious when it comes to the stock market though as the value of investments can fall as well as rise and you may get back less than you initially invested. Though I find investing is right for me investing is not for everybody. If you are interested in investing though please seek independent advice from a qualified professional, it could be the start of something great.