5 investment mistakes first-timers should avoid

Written by Rebecca O'Connor on 24th January 2017

Want to get into investing? You still have time to stick up to £15,240 into this year’s ISA allowance, if you are lucky enough to have that cash to hand – the deadline is 6 April 2017.

With low interest rates persisting, you’d do well to venture forth into the unknown wilds of investing (we promise it’s not that scary) rather than sticking with your safe-as-houses but almost pointless cash ISA.

If you do, you will find a number of investment platforms to choose from: some of the big names include Hargreaves Lansdown, Charles Stanley, Selftrade – and the newer and slightly cooler looking robo-advice platforms such as EQ InvestorsNutmeg, Moneyfarm.

For any first-time investors considering stocks & shares ISAs, Selftrade from Equiniti has produced this handy list of common mishaps people make when they start investing and how they can be avoided:

  1. Forgetting to use your allowance. If you don’t use your ISA allowance (£15,240) by the end of the tax year it will be lost forever- there is no carrying it over to the following year.
  2. Ignoring shares. When the markets are volatile it is easy to convince yourself that your money would be safer in a simple Cash ISA, but shares have been demonstrated to deliver much better returns over the long-term
  3. Failing to review your ISA frequently enough. Don’t put your cash in an ISA and forget about it. It is worth reviewing your Stocks & Shares ISA at least once a year to ensure it continues to deliver as required
  4. Don’t put all your eggs in one basket. Diversification is the cornerstone of any good ISA portfolio. A common mistake is having too much of your portfolio exposed to one asset class or sector. Funds help to achieve diversification
  5. Leaving it to the last minute. Just because the ISA deadline falls on April 5 does not mean you should delay investment decisions until the day itself. It is worth giving careful thought to how you want to allocate funds within an ISA throughout the year

Selftrade’s own research tells us that investors are torn when thinking about their investments for the year ahead.* 34% of investors are confident about the performance of their investments in 2017, yet a similar number (35%) are concerned.

When asked about the biggest threats to performance, global economic slowdown is seen as the leading issue (27%), followed by Brexit (20%) and US politics (11%). It is therefore important people think sensibly about where to put their money and do their research.

Mark Taylor, CEO of Selftrade from Equiniti, says: “People are really struggling to know what to do with their money at the moment, and we have seen investors on the platform shocked into inactivity by recent market conditions. As we see it, the key is regular investing, putting what you can, when you can, into your ISA irons out the ups and downs in the price of a fund or a share over time; essentially you end up buying a greater number of shares when the price is lower.”

“Wider economic and political events do of course have an impact on individuals’ investments; it is therefore important to keep an eye on your investments, the sectors and geographies that are doing well and diversify appropriately.”


Selftrade recommends people place somewhere between 10 and 20 holdings in their Stocks & Shares ISA to keep things manageable and to limit costs. There are a number of criteria you should consider when selecting these investments:

o   Your reason for investing and the sum you desire at the end of the process

o   Your time horizon

o   The average annual return you are therefore seeking

o   The amount of risk you are prepared to take

…And of course, being Good With Money, we’d like to add that we think funds such as WHEB Sustainability and Impax Environmental Markets, as well as shares such as Unilever, IKEA and Patagonia, which have a positive impact, should be your first port of call. If you aren’t sure how stocks rate for responsibility, download the Shape App.