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Investing for beginners in the UK: how to start?

Knowing where and what investments you should start with is not easy when you are new to investing. That’s why we at Moneyfarm have compiled this guide on investing for beginners in the UK. We hope you will find it helpful.

What are some types of asset classes with investing?Equities/Stocks, Fixed Income investments/Bonds, money market funds, Commodities, real estate, and collectables


What are some risks investors should know?Inflation risk, economic risk, market risk, interest rate risk, liquidity risk and policy risk
When should I start investing as a beginner?Once you are financially able to do so
How safe is it to start investing in stocks as a beginner?Always do your due diligence before investing

What is investing?

People often think that saving and investing are the same thing. They are not. While they both involve tucking money away for future use, they offer considerably different risks and returns.

Saving is more about putting your money away in a savings account – usually a regular or easy-access savings account, where you can get your hands on it quickly if needed, whereas investing is about putting your money into an investment account (often stock-market-related) over a long term.

In the long term, you expect that the returns, bonds, or coupons applied (usually compound interest) will considerably increase the value of the investment, enabling you to benefit from it later.

Apart from the difference in earnings between saving and investing, the other consideration is risk. Saving is relatively risk-free, but it is prone to inflation risk. Whereas investing is riskier as it is vulnerable to a number of risks, such as fluctuations in the economy and the stock markets, inflation, and change in bond interest rates. These risks can cause the value of your funds to decrease and increase.

This guide to investing for beginners in the UK is designed to help you to know whether investing is right for you, and if it is, we will tell you how to invest money and what your options are.

What are funds?

A fund can be thought of as a pool of money that is invested for a particular purpose and professionally managed by a funds manager. When you start investing in UK funds, you might have a portfolio made up of funds that you manage yourself. However, if you are not investment literate, you might initially decide to avail yourself of the services of a professional fund manager.

The types of investment funds available include tracker funds (sometimes also known as index funds) and retirement funds, i.e., pensions and SIPPs.

What are shares?

Most limited UK companies have shares. Small companies may have just one share, while larger companies can have any number. Each share represents an amount of equity in the company – equity being the amount of money that the owners invested in the business.

Those who own shares are called shareholders, and shareholders can be company directors or ordinary people. Some shares pay the shareholders regular dividends, and others do not.

In our beginners’ guide to investing in UK companies, you will come across the term “stocks and shares.” In essence, they are the same thing. But generally speaking, “shares” usually refer to single unit ownership in one company, whereas “stocks” tends to describe ownership in multiple companies. This guide refers to both stocks and shares for beginners to UK investing.

What do you want from an investment?

Most people invest in the hope of making money. The ways that shareholders hope to gain income are by share trading, receiving dividends from their shares, and waiting for compounding to get to work and increase the value of their investments.

Some who invest in stocks and shares have their minds set on trading, but stock or day trading for beginners in the UK is risky – unless you know what you’re doing. If you don’t, you must learn the basics before doing anything.

Stocks and shares for beginners in UK investing is one form of investment, but there are other forms too – for example, property investment for beginners in the UK is also quite popular.

As well as hoping to make money, investing for beginners in the UK is sometimes driven by people hoping to influence companies’ decisions and those wanting to promote environmental issues. Some people think that the best shares to buy for a beginner to UK investing are shares in ESG companies.

ESG (environmental, social, and governance) stocks and shares for beginners to UK investing are attracting more and more investors. If you would like to know more about the principles of ESG, look at ADEC Innovations.

Is investing right for you?

Investing isn’t suitable for everyone. It never will be for those who are entirely risk-averse. For others, it might be, depending on changing circumstances such as their financial position and other things like starting a family.

When considering investing for beginners in the UK, you should ask yourself these questions:

  • Do you have expensive debts?
  • Do you have any savings set aside for emergencies and unforeseen issues?
  • Do you have a high, medium, or low tolerance toward risk?
  • Are your investment goals short, or long-term?
  • Do you have enough excess disposable income to afford investing?

Having answered all the above questions positively, property investing or stocks and shares for beginners could be worth considering. To find out more, read our beginners’ guide to investing in the UK, and once you’ve finished, ask yourself again – is investing right for you?

What should a beginner invest in the UK in?

The journey of investing for beginners in the UK usually begins with the question, “In what should I invest as a novice investor?” To help you to answer this question, you must first determine your investment strategy.

You might be tempted to look for investments with high returns in the UK. However, it’s not necessarily the best way to start investing, as higher-return investments invariably carry a more significant risk factor.

On the other hand, property investment for beginners might appeal more because it is generally considered less risky. But you do have to be prepared to invest in the long term.

All investments, including property, can fall in value. But they usually bounce back, so the important issue is being able to ride out any lows and wait for the market to recover.

Considered to be a relatively safe type of property investing, REITs (Real Estate Investment Trusts) work with publicly traded stocks, and holders benefit from dividend income.

SIPPS – self-invested personal pensions

Having just mentioned investing for the long term, one of the most popular long-term investment vehicles is the SIPP or self-invested personal pension. So, investing for your retirement should be one of your priorities.

Of course, as with any personal pension, you can access your fund once you turn 55, and you will typically be able to withdraw 25% of your pension pot tax-free.

Investing in stocks for beginners in the UK via ISAs

Investing in stocks and shares for beginners in the UK is also a popular option. But buying shares for beginners to UK investing, as we mentioned earlier, can also be risky. Stock trading for beginners in the UK also carries risks. Investment decisions are best left to professionals or at least to someone with good knowledge of how the stock markets work.

With some ISAs on the market, investors can create their own portfolios. However, others are managed by a professional advisor (actively or passively), and this makes buying shares for beginners to UK investing through an ISA attractive for some. Also, any growth your fund experiences, and any withdrawals you might make, are tax-free. That’s why a stocks and share ISA is a good way to start investing as UK investor newbies.

The other advantage of an ISA is that you can withdraw money at any stage, which means you can use it for both your short- and long-term investment goals.

Should you invest in Crypto?

We have already mentioned the fact that the value of investments can decrease as well as increase. While cryptocurrencies have been known to experience notable rises in value, they suffer frequent drops too. As a result, they are one of the most volatile ways of investing money for beginners in the UK and are only suitable for those with significant risk tolerance.

But risk can be minimised. We previously mentioned that long-term investing is one way of reducing risk. Another is diversification. Investing for beginners in the UK should take both factors into account. Constructing a diversified investment portfolio is one way of doing so.

Please bear in mind that Moneyfarm does not invest in cryptocurrencies or tokens.

How to begin investing with little money in the UK

If you are investing as a beginner and are contemplating opening a stocks and shares ISA, you’ll be pleased to know that you can start investing with as little as £100. Some ISA providers will allow you to start with a £25 per month direct debit.

How to invest for beginners in the UK in 2023

As a beginner, the way to start investing money is to educate yourself by learning the basics and risks involved with investing. Set financial goals by creating a plan, then open an investment account and choose your investment based on your risk tolerance. Finally, monitor how your investment is doing.

Monefarm has ready-made stocks and shares ISA portfolios tailored to low risk tolerance individuals and may be suitable for people new to investing. They provide one of the simplest ways of investing in stocks and shares for beginners to UK investing, as long as you’re happy to delegate the responsibility of managing your portfolio to an experienced financial advisor.

But, before you make any decisions regarding investing, fully understanding your investor profile options is essential.

Making money via property investment in the UK for beginners or via the stock market for beginners in the UK is what investing is all about. But you must also always maintain the fact that losing money is always a possibility too. Also, bear in mind that diversification and investing long-term are both important factors that can help reduce the risk factor.


What are some of the investment options for investor beginners?

If you’re just getting started in investing, the stock market has a variety of assets that you can choose from, such as stocks and shares, ETFs, mutual funds, index funds, government and corporate bonds, and commodities. Other investments include property, REITs, and cryptocurrencies.

How much money should a beginner start with?

There is no universal answer. The amount a beginner investor can start investing with can vary greatly, depending on their goals, current financial situation, and level of risk tolerance. No matter your budget, you can find investments to fit your needs. However, you should only invest when you have sorted out your emergency fund and daily expenses. Also, never invest more money than you are able to lose without negatively impacting your daily life.

Why is it important to invest?

Investing can help build wealth, meet financial goals, and have financial freedom. It can help your money beat inflation, save taxes and save for retirement. You can also use investing to support causes important to you by investing in companies with similar visions and goals.

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*Capital at risk. Tax treatment depends on your individual circumstances and may be subject to change in the future.