Investing for beginners – Which?

Fed up with low-interest savings accounts? Investing offers a good chance of growing your money above inflation, but comes with the risk that you might not get back everything you put in.

Here, we set out a step-by-step guide to get started with investing and how to find the right investments for you.

Please note that this article is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of an investment platform before committing to any financial products.

Step 1: Why do you want to invest?

Before you get started with investing, it’s important to think about your aims for your money.

Are you just looking to grow your money? Or are you looking for a regular income? Is there a set amount that you’re aiming for?

In general, you should be prepared to part with your money for at least five years, as this gives you a better chance of your money growing. This is particularly important if you’re close to retirement.

Having set goals will help you to decide how much risk you need to take to achieve what you want.

Here are some typical examples of financial goals and investment considerations:

• Buying property – If you’re planning to buy in the next five years, keep your savings in a cash Isa or lifetime Isa. If you’ve got more than five years, and it’s your first home, consider an investment lifetime Isa to benefit from government bonuses.
• Getting married – Cash savings are likely to be more suitable, unless you’re getting married at least five years from now.
• A child’s university fees – Investing within a junior investment Isa can help build your pot, plus the money will have as many as 18 years to ride out dips in the market.
• Retirement – Putting money into your pension, through additional voluntary contributions, may be the best option if you’re not close to exceeding your annual allowance.

Step 2: Can you afford to invest?

You don’t need to be super rich to invest, but you’ll need some easily accessible savings built up before you get started.

This should be about three months’ worth of expenses, to cover you for any emergencies. If you don’t have this, you might need to take money out of your investments at a bad time, and get back less than you put in.

It’s also important to pay off any high interest debts, like on a credit card. Otherwise, you’d likely have to pay more to pay off interest payments than you would make in profits from your investments, and be worse off in the long run.

• Find out more: tips to pay off your debt

Step 3: Setting up an investment account

To get started investing, you’ll need to either set up an account with an investment platform or find a financial adviser.

By working with a financial adviser, someone with expertise and experience will be able to ensure your investments are tailored to your long term needs and wishes.

The downside is financial advice is expensive, and might not be an option if you have less to invest.

Luckily, it can be easy to manage investments yourself with an investment platform.

You can sign up to a platform and open a stocks and shares Isa, which means you won’t have to pay tax on any profits you make.

Step 4: Decide on your level of risk

There are no guaranteed right answers when it comes to what to invest in, and the right investments for you will depend on how much risk you can tolerate. 

If you’re looking to increase your potential return, you will almost always have to accept some additional element of risk. As a beginner, though, it’s not a good idea to start with some of the riskiest types of investment, like crypto.

Investments are often described as ‘cautious’, ‘balanced’ or ‘adventurous’, which is often a reflection of how far and how often the price changes. 

Therefore it’s worth asking yourself questions such as:

1. Would you panic if the price of one of your investments dropped by 10% overnight?
2. How about 20%?
3. Would you take on more risk to achieve a 15% return, rather than a 5% return?

Knowing your risk appetite makes it easier to pick investment funds and exchange-traded fund (ETFs), which have a risk rating on a 1-7 scale, and the right mix of asset types: shares are often seen as more adventurous and bonds as more cautious.

• Find out more: our guides to types of investments

Step 5: Pick a diversified range of investments

You can balance some risk by ‘diversifying’ your investments – basically having a mix of different types of investments, based in different sectors and geographical areas – which helps to prevent your whole investment portfolio being brought down by the same outside factors. 

Though, in the same way you wouldn’t suffer as extreme losses, you wouldn’t gain any extreme benefits from investing in something that massively takes off.

For example, if you just invested all of your money in one UK company stock, you’d be at risk of losing a lot of what you put in if anything going wrong internally. 

If you then took a step back and invested in a FTSE 100 fund – a single investment that allows you to split your money across the 100 biggest UK companies you can invest in – you’d not be so affected by the inner workings of a single company, but something like a recession in the UK would cause a big drop in your investments. 

Then, splitting money into different countries and something like bonds as well as stocks could give you some relief from those impacts. 

Three approaches to building a portfolio:

Step 6: Stay calm

Once you’ve selected your investments, resist the urge to constantly check their performance, which could tempt you into making unnecessary tweaks that can increase your costs and potentially worsen performance.

Setting up a direct debit to regularly invest a specific amount across your portfolio each month can reduce the urge to watch the market and time your investments.

Plus some investment platforms charge lower fees, or waive them entirely, when you set up regular investing.

An annual review of your investments is likely to suit most people.

• Find out more: Best stocks and shares Isas 2026