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Before you start investing

Assess your current situation

It’s never a good idea to invest before you have made sure you are in a strong financial position. Our advisors usually recommend you have an ‘emergency cash fund’ of between three and six months of normal expenditure before considering any investments. For those in retirement, this could be higher.

You should also avoid investing if you have short-term debts. Many forms of debt, particularly bank and credit card loans, come with high interest payments so it usually makes sense to pay off these debts as quickly as possible.

Household budget calculator

Our handy household budget calculator can help you assess your current financial situation.


Investing is a long-term decision, and you should only invest in assets you intend to hold for at least five years.

Set financial goals

It is important to take the time to consider why you are investing. Your goal might be to save for buying a house, your children’s future or your retirement.

Understanding what your goals are, and the timeframes you consider to be reasonable to achieve those goals, is essential in deciding on the mix of your investments.

Assess the risks

Before investing, you should make sure you are fully aware of the risks. There are always investments that will make you money – but there are also ones that won’t.

Some investors will prefer low risk investments, while others will be happy to take on a higher level of risk. If successful, higher risk investments can potentially offer higher rewards.

All investments can fall as well as rise in value, so you could get back less than you invest. It is important that you do not invest money that you are likely to need to call on at short notice.

Take a look at what’s on offer

Even though there are a lot of things to think about, making an investment decision doesn’t have to be difficult. Hargreaves Lansdown offers you the choice of ready-made portfolios or accessing financial advice to help you make investment decisions.

If you’d like to take a DIY approach to investing, we offer lots of additional guides, research and resources to help you improve your investments’ performance.

If you’re unsure of the suitability of an investment for your circumstances seek advice.

Next: How to invest