📈 Investing for Beginners in the UK

Introduction to Investments

An investment is an asset acquired with the goal of generating income or an increase in value over time.

In summary

You invest money and, instead of getting savings interest, if the investment increases in value that generates the profitable return for you (to then withdraw later at the higher value).

The most important thing to remember is that the value of your investment can go up and down. That’s what makes investing higher risk than a simple savings account.

Some investment examples

• Shares in a specific company
• Stocks, UK or overseas
• Funds
• Bonds
• Gilts

Disclaimer: if you decide to invest, your capital (i.e. money) is at risk. The value of your investment can go down as well as up and you may get back less than you invest.

Useful links: Make My Money Work blog post on how to set up an investment · MoneyHelper: investing, free government-backed guidance on the basics.

Determine your acceptable level of risk

Investments have varying levels of risk. Usually the higher the risk, the higher the potential return, but also the higher the potential loss.

Think about risk in the context of “how much £ loss would be acceptable to me?”

Useful links: Aviva’s risk profiler questionnaire, which tells you which of 5 risk tolerance levels you fall into.

Set up a Stocks & Shares ISA

A Stocks & Shares ISA is a tax-efficient investment account, so you don’t pay tax on anything you earn through the ISA (individual savings account).

Much like a cash ISA, there are lots of providers who offer one, and they’re often called a platform. Instead of holding cash, you hold investments within the ISA, and you’re not taxed on the income or increase in value they generate.

The annual allowance

There’s an annual ISA allowance of £20,000 across all your ISAs (correct for the 2026/27 tax year, which runs from 6 April 2026 to 5 April 2027). It has been frozen at this level for several years, and the government has said it will stay at £20,000 until April 2031. From 6 April 2027 the most you can put into a cash ISA falls to £12,000 for under-65s, but the overall £20,000 allowance stays the same. Always check the latest figures on GOV.UK before making decisions.

Setting one up

You usually apply online with some basic details:

1. Your nameand date of birth
2. Your addresswhere you live now
3. Bank detailsto fund the account
4. NI numberyour National Insurance number

You can invest outside of a Stocks & Shares ISA, much like you can open a savings account outside of a Cash ISA. An ISA is just the more tax-efficient and simpler way to get started. Outside an ISA, gains above your annual allowance may be subject to Capital Gains Tax, and a pension is another tax-efficient home for long-term investing (see Pensions and how pensions affect your tax).

Useful links: Like you compare car insurance providers, you can compare platforms on sites like MoneySuperMarket.

Choose your investments

Now you know your risk level and you’ve set up the mechanism to invest, you can choose what to invest in! You can buy shares in a specific company, stocks (UK or overseas), funds, bonds or gilts. See the glossary for the definition of each.

Your two options

Suggested reading on the DIY approach

• 📘The Millionaire TeacherAndrew Hallam
• 📗Quit Like a MillionaireKristy Shen · US based, but the theory is relevant for the UK
• 📙How to Own the WorldAndrew Craig

Avoid the scams: check any investment against the FCA warning list. Past performance is not a reliable indicator of future performance, so if an investment sounds too good to be true, it probably is!

Some of the better-known UK platforms

• AJ Bell
• Hargreaves Lansdown
• Interactive Investor
• Vanguard

Useful links: MoneyHelper: thinking about investing? Make sure you understand the risks