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Before you invest: 5 questions to ask yourself

This article offers five questions to help you think about whether investing is right for you at this moment. It does not tell you what to do or assess your situation for you, but it can help you reflect on risk, timeframes, and your financial priorities.

3 key takeaways

These questions are for reflection. They do not tell you what you should do and they do not replace regulated advice.

Ask yourself whether you could cope financially if this investment did badly and you lost some or all of the money.

Another useful question is whether you understand how a particular investment works and how you could lose money.

The basics

These questions are for reflection. They do not tell you what you should do and they do not replace regulated advice.

Question 1: How would you feel if your investments fell in value? When you invest, the value of your investments can go down as well as up, and you could get back less than you put in.

Question 2: Ask yourself whether you could cope financially if this investment did badly and you lost some or all of the money.

Question 3: Another useful question is whether you understand how a particular investment works and how you could lose money. It is also worth thinking about how easy or hard it might be to get your money back if your plans change.

Question 4: Many money-guidance sources suggest building some emergency savings and tackling high-cost borrowing before taking

. The right buffer is personal to you, so this article does not set a fixed rule or amount.

Question 5: If you need the money soon, falls in value may matter more than if you plan to stay invested for many years. That is why

matters.

If you are still unsure, it is okay to take more time or not invest at all. If you're unsure, you may want to consider speaking to a regulated financial adviser.

Illustrative example

Using the questions without turning them into a score

Imagine Alex has some savings, a small amount of expensive borrowing, and is thinking about starting to invest. Alex uses the five questions to pause and reflect: how a fall in value would feel, whether there is enough cash for unexpected costs, whether the borrowing needs attention first, when the money might be needed, and whether the basics of investing feel clear. The process helps Alex think more carefully, but it does not produce a pass or fail result and it does not tell Alex what to do next.

Common misconceptions

Myth

If I have not done all of these things, I am not allowed to invest.

Reality

These questions are prompts, not rules. They are there to help you reflect, not to label you as ready or not ready.

Myth

If I answer yes to all five questions, investing is definitely right for me.

Reality

The article does not assess suitability. Only you, and if you choose one, a financial adviser, can decide what is right for you.

Myth

There is one fixed emergency-savings or debt rule that everyone must follow before investing.

Reality

Many people find it helpful to keep some cash for emergencies and think carefully about expensive borrowing, but the right answer is personal and this article does not set a universal threshold.

Test your understanding

Are these statements true or false? Tap to reveal the answer.

“If I have not done all of these things, I am not allowed to invest.”

“If I answer yes to all five questions, investing is definitely right for me.”

“There is one fixed emergency-savings or debt rule that everyone must follow before investing.”

Sources

FCA – 5 questions to ask before you invest FCA – Golden rules of investing FCA – Risk warnings for mainstream investments FCA – Finding an adviser

Before you invest: 5 questions to ask yourself

3 key takeaways

These questions are for reflection. They do not tell you what you should do and they do not replace regulated advice.

Ask yourself whether you could cope financially if this investment did badly and you lost some or all of the money.

Another useful question is whether you understand how a particular investment works and how you could lose money.

The basics

These questions are for reflection. They do not tell you what you should do and they do not replace regulated advice.

Question 1: How would you feel if your investments fell in value? When you invest, the value of your investments can go down as well as up, and you could get back less than you put in.

Question 2: Ask yourself whether you could cope financially if this investment did badly and you lost some or all of the money.

Question 4: Many money-guidance sources suggest building some emergency savings and tackling high-cost borrowing before taking

. The right buffer is personal to you, so this article does not set a fixed rule or amount.

Question 5: If you need the money soon, falls in value may matter more than if you plan to stay invested for many years. That is why

matters.

If you are still unsure, it is okay to take more time or not invest at all. If you're unsure, you may want to consider speaking to a regulated financial adviser.

Illustrative example

Using the questions without turning them into a score

Common misconceptions

Myth

If I have not done all of these things, I am not allowed to invest.

Reality

These questions are prompts, not rules. They are there to help you reflect, not to label you as ready or not ready.

Myth

If I answer yes to all five questions, investing is definitely right for me.

Reality

The article does not assess suitability. Only you, and if you choose one, a financial adviser, can decide what is right for you.

Myth

There is one fixed emergency-savings or debt rule that everyone must follow before investing.

Reality

Many people find it helpful to keep some cash for emergencies and think carefully about expensive borrowing, but the right answer is personal and this article does not set a universal threshold.

Test your understanding

Are these statements true or false? Tap to reveal the answer.

“If I have not done all of these things, I am not allowed to invest.”

“If I answer yes to all five questions, investing is definitely right for me.”

“There is one fixed emergency-savings or debt rule that everyone must follow before investing.”

Sources

FCA – 5 questions to ask before you invest FCA – Golden rules of investing FCA – Risk warnings for mainstream investments FCA – Finding an adviser