New to Investing?

While saving is about putting money aside for a rainy day, investing is about growing our money to achieve important goals in our life. For example, if we’re thinking about buying a house, our children’s or grandchildren’s education, helping them get a foot on the property ladder or to enjoy a good standard of living in retirement, then we need to think more seriously about investing.  

Of course, saving is important but these days, with interest rates as low as they are, the value of your savings is being eroded by inflation so the money we save today doesn’t give us a good return.

This is where the investment management industry can make a huge difference. Investing is all about making your savings or your spare cash work harder and smarter for you. By investing even modest amounts of money over time (from 5 – 20 years) into things like stocks and shares and bonds, it will most likely earn a better return than sitting in a low interest rate bank account.

Perception versus reality

When we think about investing, we often think of rooms full of computer screens, complicated algorithms and trading floors. In reality, it’s a vast number of highly skilled people using their wide-ranging and in-depth knowledge and expertise to carefully balance risk and return for every investor, making their money work harder. 

Important information

Remember, the value of investments, and any income from them, can fall or rise, so you could get back less than you invest. If you’re new to investment, we recommend you seek independent financial advice or talk to your bank. Tax rules can change and the value of any benefits depends on individual circumstances.

You don't need to be a millionaire to invest

Many people think investing is for the very rich and that investment managers aren’t interested in ordinary people. The truth is very different. All sorts of people in all kinds of jobs and family situations invest, including those on modest incomes. In fact, it’s a professional investment manager’s job to respect their clients and their money – regardless of who they are or how much they have to invest. 

And you can start investing in stocks and shares with as little as £25 a month. Or you can invest a larger lump sum, perhaps through a house sale, or inheritance, or a work bonus. The point is, investing is an opportunity for everyone, not just the wealthy.

It's not much harder than saving

Investing gives you better returns, but it’s a lot more complex than savings, right? Wrong. Lots of things seem complex when you don’t know much about them. That’s why some people think saving is easier. 

Thankfully, the investment industry is on hand to de-mystify the business of investing and help guide you in your investment decisions, whether you have a small or not-so-small amount to invest. In fact, once you’ve worked out how much of your savings you want to invest, and what for – for example, for a short term goal or to save for the future – you can get involved as little or as much as you want in making investment decisions. 

It doesn't take up too much time

Some people are put off investing because they think you need to spend hours learning about it and then hours more keeping an eye on your investments. Nowadays, there are all kinds of products and tools, whatever your budget and time you have available. And investing can be simpler once you’ve seen how to guide your own investment decisions. 

Alternatively, you can leave it to experts to look after your investments and make investment decisions for you. One way to do this is to use investment funds. Instead of making the decisions yourself and having to spend time and money keeping an eye on how your investment is doing, fund managers can help you. Funds come in many shapes and sizes, and you can always talk to a financial adviser if you want an expert who can explain the choices available and recommend the best way forward.

There's a level of risk that is right for you

Investing is not as scary as you think. It does come with some risks, but over the long-term it can help you grow your savings . One of the biggest risks we all face when it come to our cash savings in the bank or building society is inflation. If inflation is higher than the interest we receive on our savings, then we are effectively losing money.

While we’d all like a higher return on our savings, many of us feel that we don’t have money to ‘play with’ by investing it. This is why there are now investment options for every kind of investor. For example, investments that offer higher returns than savings, but which protect your capital. Or, if you have more money to spare later on in life, you can invest in products that have a higher return and a higher level of risk. Fortunately, the investment industry is here to help you understand more about levels of risk and choose the right investment product for your money.

You choose where to invest

Professional investment managers use their experience and expertise to manage the money you choose to invest. They, and their teams, carefully balance risk and return, to make your money work harder and grow over time. 

What’s more, you can choose where your money is invested, based on your personal values and outlook on life. For example, you can choose to avoid funds that invest in things like fossil fuels or tobacco, and instead choose only investments that aim to deliver positive change. The point is that it’s your money and you have control over where it is invested. 

Investing is for all stages of life

Contrary to popular opinion, investment isn’t something to do you when you’re older, retired and have more spare cash or time to devote to it. In fact, the older you are, the less time there is for your investments to grow. So the sooner you start, the better the retunrs are likely to be. Compound interest will work for you every year and the difference it can make over 10, 15 or 20 years will be significant. 

Also, investing is about long-term gains, not short-term wins. Over the long-term you’ll almost always recoup any short-term losses and experience significant long term gains. Remember, there’s an investment product to suit everyone’s needs and attitude to risk. For example, if you want a guaranteed safe return you could invest in bonds, or if you want higher returns and the risk that goes with it, you could invest in commodities like metals or crops.

It’s easier to get started than you think

Saving is simple because we hear a lot about it from our banks and we see lots of adverts on TV and online. Less so with Investing. But the good news is that if you know where to look online, you can find lots of really clear and simple information about getting started with investing at no cost. 

For example, straightforward explanations about how much (and how little) you can or should invest. Or how to choose the right investment and for how long. Or how to better understand risks and returns, or identify investments that fit with your outlook on life. And, of course, how to manage your investments online. Many companies also offer customer services to access funds (not just their firm’s funds). Or you could contact a financial adviser to help for a fee. For some independent financial advice on where to start – check out 

Types of investments

Here’s a brief description of the main types of investment you could hold: 

ISAs - these individual savings accounts are exempt from tax on their returns, so help your money to work harder. How much you can invest in ISAs each year is limited, and typically changes each tax year. ISAs can be stocks and shares ISAs or cash ISAs.

Stocks and shares (or equities) - these investments buy shares (or stock) in a company that are traded on stock exchanges (eg FTSE 100). The idea is to sell shares for more than you bought them for and pocket the difference, Historically, equities have outperformed most other investments over the long run.

Bonds (or fixed income) - these are long term loans made to large organisations, such as corporations, or governments. The borrower promises to pay the bond back on a certain date. Until then, they pay pre-agreed interest payments to the bondholder (ie you). These are considered less risky as they pay a fixed rate of interest income over a fixed period of time.  

Infrastructure – this includes investing in projects such as hospitals, schools, roads and housing and social housing projects, plus other things such as wind and solar farms.  

Funds - may specialise in some investments (e.g shares) or hold many different investment types. A fund manager overseas the fund and decides which types of investments or securities (eg bonds, shares, property etc) to hold, in what quantities, and when to buy and sell them. An investment fund offers more choice of investment opportunities, greater management expertise, and lower fees than investors might be able to achieve on their own. Types of funds include mutual funds, exchange-traded funds (ETFs) or money-market funds.

Find out more

For some independent financial advice on where to start – check out