Back to Basics: Investing for Beginners

Alex Gard, aged 8, asks Morningstar analyst Dan Kemp why he should invest when he could be spending money on sweets

Holly Black 01 October, 2019 | 10:11
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Alex Gard: Hello, I'm Alex Gard. This is Dan Kemp. And today, we're talking about investing. What is investing?

Dan Kemp: Hello, Alex. Well, that's a very good question. So, what investing is, is taking some of the money that we have today, and then buying something which we hope will be worth more in the future. So, there are lots of different types of investing. Some people try and invest in things like wine, or old cars. But most of the time, it means buying bits of companies or lending money to people so that that will grow over time, it will have more in the future.

Gard: Is investing just for adults?

Kemp: Absolutely not. Investing is for everyone, Alex. It's is for grown-ups with their money, but also for young people like you, you can get involved in investing, and sometimes parents invest on behalf of their children, even grandparents invest on behalf of the children. Investing is for everyone.

Gard: How young can you be when you start investing?

Kemp: Well, really, you can start at any age, any age where you have some money that you're able to give up. So, if you have some pocket money, you could give some of that up for today, and then invest that to try and get some more money into the future. So, there's no minimum age.

Gard: And why is that better than spending money on sweet or going to the cinema?

Kemp: Well, it's not really better than spending money on sweets and go to the cinema, not for all of your money. It's important that you spend some of your money on sweets and going to the cinema and other great things. It's all about having a balance. So, some money you'll want to spend today, and some money you put away to look after your future. And the great thing about investing is that if you invest over a long period of time, then you can get a really good amount of money back. And so, it's good to have some money for today, and some money for the future.

Gard: When can I have the money I've invested?

Kemp: Well, with most investments, you could have the money back whenever you want it. But it's really good to start investing with the idea that you won't need that money for a long period of time. So, someone like you might be investing for the next 10 years or even the next 50 years. But you can get it back normally when you need it. But always think about the long term. That's when investing really works for you.

Gard: Thank you, Dan. Goodbye.

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Holly Black

Holly Black  is Senior Editor, Morningstar.co.uk

 

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