If you’re new to investing, the stock market can be a scary place to start. Read our investing in stocks for beginners guide and decide if investing is for you.

Should I invest in the stock market or save for the future?
How to work out if investing in the stock market is right for you.
If you’re new to the investing game, financial markets can be a pretty scary place to start.
Seriously, knowing your investment ‘can fall as well as rise’ or that you could ‘get back less than you put in’ doesn’t exactly put your mind at ease, does it?
But there are plenty of good reasons to get involved in investing, as long as you’re comfortable with the risks involved.
History shows us that, over time, investing wisely tends to deliver better returns than holding cash. Investing in the stock market has historically yielded higher returns over the long term compared to keeping your money in a savings account. However, remember that past performance is not a guarantee of future results.
If you want to recover from any losses, you’ll usually need to leave your money invested for a while. That’s why it’s essential to have a longer-term investment horizon, typically five to ten years, to weather the ups and downs of the market.
So if you’ve got an interest in investing, here are a few things to help you work out if it’s all it’s cracked up to be.
What are your savings goals?
Before deciding if investing is right for you, ask yourself a few questions.
What are you saving for? And when do you want to achieve your goals?
Your investment aim—whether it’s generating income, growth, or a mix of both—will influence the strategy you choose.
If you’re putting money away for retirement or for your kids to go to college, you might not need it anytime soon, so investing could be well worth it.
But say you’re saving up for a new car or a wedding and need to splurge soon. Well, in that case, investing probably isn’t right for you.
That’s because the value of an investment can rise and fall.
So, if you want to make the most of your money, leave it in as long as possible to give it more time to grow and recover from short-term losses.
Many investment products also have a minimum investment period or amount, so it’s important to consider these minimums when planning your investment.
Understanding share prices and volatility
When you start investing in stocks, one of the first things you’ll notice is that share prices don’t stand still—they move up and down, sometimes quite dramatically. This movement is known as volatility, and it’s a regular part of how the stock market works. Share prices can change for all sorts of reasons, from a company’s latest earnings report to significant shifts in the entire market or even global events.
If you buy stocks on a stock exchange like the London Stock Exchange or the Nasdaq Baltic, you’re buying a small piece of a company. The price you pay for each share reflects what investors think the company is worth at that moment. But because opinions and market conditions change, so does the share price.
Sometimes, demand for a company’s shares will push the price up; other times, negative news or a market downturn can cause prices to fall.
For most investors, these ups and downs can feel unsettling, especially if you’re new to investing in stocks. That’s why many people choose to diversify their investments across a range of options, such as exchange-traded funds (ETFs), mutual funds, or investment trusts. These funds invest in a variety of companies, sectors, or even the entire market, which can help smooth out the bumps if one company or sector has a bad day.
Before you start investing, it’s essential to open an investment account with a reputable broker.
Take the time to verify their credentials and review the complete list of costs and fees involved in buying and selling shares, as these can affect your profits over time. Remember, past performance isn’t a guarantee of future results, so always conduct thorough research before investing in any company or fund.
Owning shares can also give you voting rights at company meetings and a share of the profits through dividends, if the company pays them.
But keep in mind, the value of your investments can fall as well as rise, and you might get back less than you put in, especially if you need to sell shares during a downturn.
Managing your investment portfolio involves regularly reviewing your holdings to ensure they remain aligned with your goals and risk tolerance. Some investors include bonds or other assets alongside stocks to help mitigate risk. And while it’s tempting to react to every rise and fall in share prices, most people find that staying focused on their long-term aims works best.
Finally, don’t underestimate the human side of investing.
It’s easy to get caught up in the excitement when share prices are rising, or to panic when they fall. However, maintaining a calm demeanour and adhering to your plan can help you make more informed decisions and avoid costly mistakes.
What’s your attitude to risk?
Different investments carry different types of risk.
The risk associated with each asset can vary, so understanding the type of asset is essential. And only you can decide what you’re comfortable with.
With investments, there’s always an obvious risk – you may not get back the amount you originally invested.
Over time, thanks to inflation, your money could be worth less compared to what you could get with the same amount of money today, as prices rise and the rate of interest on your cash fails to keep up. The returns on investments can vary significantly depending on the asset and market conditions.
If you understand the level of risk you’re taking, and you’re happy to accept a higher risk for higher rewards, investing could be well worth it. The profit potential is often linked to higher risk.
Can you reduce your risk?
Of course you can.
You could choose less risky investments or invest in a mix of things to ‘spread’ your risk. Mutual funds and stock funds are popular options for diversification, as they allow you to invest in a broad range of assets and help manage risk.
Or let your bank or a stock investing app do it for you.
They have ready-made investments that spread your risk across various types of investments in multiple countries. These portfolios are professionally managed and may include index funds that track a market index.
Less risky. More straightforward. Managed investment products can help you manage your portfolio more easily.
How much do you have to save or invest in stocks?
Investing isn’t just for the super-rich.
You can start your investment journey with just a small amount of money, or pay in a bigger lump sum if you prefer. You can purchase stocks, mutual funds, or ETFs through a brokerage account.
Just remember that when considering how much you can afford to invest, always keep some money set aside for a rainy day. It’s also important to consider the cost of investing, including any fees, when deciding how much to invest.
Reinvesting dividends can help you accumulate more shares over time, increasing your potential returns.
You should consider investing as a medium- to long-term commitment, so be prepared to hold your investment for at least five years. Tax depends on your circumstances, and the regulations may change in the future.