Today’s video is all about how to choose your first investment. It might feel like a daunting task, but it doesn’t need to be. We’ll cover ‘Paralysis Analysis’ and how it can be avoided, talk about goal setting and delve into risk, amongst other things.

0:00 – Intro
0:46 – Narrow down the choice
3:47 – What are your goals?
5:05 – What is your risk tolerance?
7:27 – Risk Questionnaire

Some example risk questions as mentioned in the video:

1. Imagine you have invested £100,000. Which of the five scenarios below would you want for your investment portfolio?

Best-case increase (£) Most likely result (£) Worst-case losses (£)
Scenario 1 13,000 3,000 –11,000
Scenario 2 15,500 4,000 –12,500
Scenario 3 20,000 5,000 –16,500
Scenario 4 24,500 6,000 –21,500
Scenario 5 28,000 6,500 –25,500

2. Investing involves a trade-off between risk and returns. In the past, investments with higher returns have been associated with greater risk and chance of loss. Whereas cautious investments that have had a lower chance of loss also have achieved lower returns. Which of the following statements best describes your attitude to risk?

– I am most concerned with risk. I am willing to accept lower returns in order to limit the risk of loss.
– I am willing to accept some risk and chance of loss in an effort to achieve modest but somewhat higher returns.
– I am willing to accept moderate risk in order to achieve higher returns. Reducing risk and increasing returns are equally important to me.
– I want to achieve strong returns on my investments. I am willing to accept somewhat higher risk and chance of loss.
– I am mainly concerned with getting the highest possible returns on my investments. I am willing to accept significant rises and falls in the value of my investments and a significant chance of loss.

Here’s the link to our ‘How to Pick Stocks’ Video mentioned at the end:

Our Investing 101 series covers the fundamentals of investing and tries to bring you the basics to build a solid foundation. Let us know in the comments about future topics you would like to see covered in these videos.

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As with all investments, your capital is at risk. Investments can rise and fall, and you may get back less than you invested.