How to start investing: a beginner’s guide
Investing is a great way to make your money work harder for you over the long term. Here's everything you need to know to get started.
Starting investing can feel daunting. It’s easy to feel overwhelmed by the jargon, the range of choices, and the risk involved. While the government is trying to make investing more accessible with the launch of its ‘Invest for the Future’ campaign, savers may wonder if it’s better to stick to safe, dependable cash.
While cash ISAs and savings accounts are less risky in the short term than investing in stocks and shares, cash is a poor way to grow your wealth over the long term, because it barely keeps pace with inflation.
Compared to saving, investing may help you make more money.
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Research from Fidelity International found that £20,000 saved into a cash ISA on 6 April 2017 would be worth £23,549 by October 2025. But to keep up with inflation over that period, it would have needed to grow to £27,000.
The same amount invested into a global tracker fund in a stocks and shares ISA would, as of October 2025, be worth £50,700, according to the analysis. That’s more than double the initial investment in nominal terms, and reflects an annual growth rate of around 12%.
Stock markets go down as well as up over the short term, but they tend to outperform cash considerably over the long term. They don’t carry cash’s almost-guaranteed risk of losing out to inflation.
If fear of the short-term risks associated with investing is holding you back from getting started, you’re not alone.
The Financial Conduct Authority’s Financial Lives survey revealed that 54% of adults with significant cash savings and no investments outside their pension had not considered investing. Fear of losing money was the main reason for this hesitance with 34% of respondents citing this as a reason, while 29% said they lacked the knowledge or support they needed to feel confident investing.
YouGov surveyed 2,000 adults on behalf of investing platform Freetrade, and 26% of respondents indicated that the fear of losing money in the stock market deters them from investing more.
“In the UK, fear of loss seems to be overshadowing fear of missing out,” said Duncan Ferris, analyst at Freetrade. “But avoiding investing can harm savers over the long term, as inflation eats away at the real terms value of cash savings.”
Investing is key to getting your money working as hard as possible for you over the long term. Pensions are a form of investing: you’ll already be invested in the stock market through your pension if you have one, but making your own investments could help grow your wealth for spending before you reach retirement age.
We’ll go through some of the questions that beginner investors ask and explain how you can get started in your own investing journey.
This article is intended as information and inspiration for beginner investors, but nothing within it should be considered investment advice. Conduct your own thorough research before you start investing, and speak to a financial adviser if you are able to.
“Unfortunately, the UK is chronically underinvested, with only around a quarter of adults choosing to put their money to work in investments,” said Claire Exley, head of advice and guidance at J.P. Morgan Personal Investing. “Our tendency towards cash and our aversion to risk when it comes to investing could be holding people back from achieving their financial goals.”
Watch this episode of MoneyWeek Talks where former prime minister Rishi Sunak tells MoneyWeek’s Kalpana Fitzpatrick why he believes education rather than policy is key to getting Brits investing.
What is the difference between saving and investing?
Saving is about short-term wealth protection, while investing grows wealth over the long term.
“Saving is for stability, investing is for growth,” says Rob Morgan, chief investment officer at Charles Stanely. “When saving the aim is to build up a buffer, either for emergencies or for planned spending.”
Cash holdings are suited to this short-term cover because, whatever happens, your savings will be worth at least as much a year from now as they are today.
Investing means taking more risk over the short term for greater rewards over the long term.
“The key ingredient is time,” says Morgan. “The shorter period you invest over the higher chance of loss rather than gain, which is why investing only becomes reliable over a five-to-ten-year horizon – and ideally longer.”
Even if your investments fall in the short term, they will likely more than recover those losses, and beat inflation, over the longer term.
The global economy is cyclical: busts naturally create the conditions that lead to the next economic boom, and the stock market reflects this cycle. The dot-com bust – the longest stock market downturn in the last century – lasted just two and a half years.
That doesn’t mean that all investments are created equal. Where you choose to put your money makes a big difference. But luckily for beginner investors, some of the simplest investments are often the best.
Should beginners pick stocks or invest in funds?
A ‘share’ is a unit of ownership of a company that entitles the owner to a share of the company’s profits. ‘Stock’ – as in ‘the stock market’ – technically refers to all of a company’s shares, though it is used interchangeably with ‘share’. ‘Equity’ is another word for stocks and shares, referring to the part of the company that shareholders own.
A fund, meanwhile, is a bundle of shares (and/or other asset types). For beginner investors, funds generally represent a safer approach to investing because they are more diversified.
Buying shares in a company effectively bets the entirety of the investment on that particular company doing well. Buying a fund spreads the investment across multiple companies. This diversification tends to reduce the likelihood that your investment will fall in value, compared to investing in any one of the stocks the fund holds.
“Instruments like mutual funds offer anxious or bearish investors a chance to gain exposure to stocks, bonds, and more, without putting all their eggs in one basket,” says Ferris.
The stock market is a very different thing from an individual stock, and over the long term, stock markets tend to increase in value ahead of inflation. Funds that track the stock market are a simple way for beginner investors to tap into this trend.
Read our explainer on investment funds for beginners for more information on funds and how they work.
How much money do you need to start investing?
One widespread myth about investing is that you need to have a lot of money to start out with to make it worthwhile. Freetrade’s analysis showed 33% of people felt that a lack of disposable income was what held them back from investing more – the highest proportion of any response.
But as long you have emergency savings and cash for the short term put aside, you can invest as little or as much as you like.
Emergency savings are there to cover unexpected costs, such as a new car tyre or a boiler repair.
It is also worth minimising any high-interest debt before you start investing, such as credit card bills where you are paying interest.
But once this is in place, you could start investing from as little as £25 a month. Some platforms let you start with even a pound, but it is better to commit to a meaningful amount to really see your wealth grow.
How old do you have to be to start investing?
The earlier you get started, the better, as your investments will have longer to compound. When investing, the power of compounding can turbocharge your returns.
Parents and guardians can open and invest in a Junior stocks and shares ISA and a Junior Sipp from the day their child is born. The child gains access to them from age 18, though they won’t be able to spend the Junior Sipp until they reach at least 55 (rising to 57 in 2028).
But even people approaching retirement age and retirees can benefit from sound investing. Someone in the 80s or 90s may be investing for their heirs rather than themselves.
Where to start investing as a beginner
Often the best way to get started investing is using a stocks and shares ISA. You can invest up to £20,000 a year in stocks, funds and investment trusts – and, crucially, you don’t pay any capital gains tax and dividend tax on your investment gains.
If you’re ready to invest, it's easy to get started using an online investment platform. Some will offer a selection of ready-made portfolios, including ISAs, allowing you to select a given risk profile – usually low, medium or high. These digital robo-advisers will manage your investments for you.
Alternatively, once you have opened an investment account or your stocks and shares ISA with your chosen provider, you can start investing into the funds, stocks and trusts of your choice.
As with savings, it pays to start an investing habit. “There are benefits to investing gradually over time,” explains Exley. You can set up a direct debit to pay a set amount in each month, or pay in a lump sum if you prefer.
Some platforms may have a minimum monthly amount or lump sum to pay in to get started.
Five pitfalls for new investors to avoid
The advantage new investors have today is the ability to learn from the early mistakes of others without paying the price themselves, Charlene Young, senior pensions and savings expert at AJ Bell said. “By understanding the common pitfalls upfront, investors can keep costs in check, and stick to a clear plan for building long-term wealth.”
1) Trying to time the market
The old saying that’s worth remembering is, it is time in the market, not timing the market. This means not trying to wait for the perfect moment to invest your cash – because no one can predict the future – but just getting started and then staying the course. There will be ups and downs, this is just part of investing. But long term trends show investing typically beats cash (if you avoid panicking and selling when markets fall).
“If you’d still rather not begin with a lump sum, drip feeding your cash into the markets might help you feel more comfortable,” said Young.
2) Lack of diversification
Putting all your investment eggs in one basket is a risky strategy. If the specific sector or stock you’re invested in struggles, your portfolio takes the full hit. Diversification aims to spread and balance some of the risks of investing and smooth your return over the long term.
“It’s crucial to note that diversification isn’t simply having lots of holdings either. If you’ve got multiple shares or investments in similar regions or sectors, you might still be exposed to higher market risks than investing in something like a multi-asset fund,” said Young. These are funds that pool investors’ cash together and spread it across different types of investments, such as stocks and shares, bonds, cash and alternatives like gold or property within one fund.
3) Investing without a plan
“Investing should be driven by your goals and timeframe, not headlines or short-term noise. Having a plan and strategy aligned with your goals means you’re more likely to stay disciplined and remain invested through any volatile periods,” said Young.
4) Not keeping a lid on costs
You can’t control financial markets. The only thing you can control (by choosing where and how you invest) is the fees you pay to invest. Young said: “Keeping your investing costs as low as possible is one of the best ways to help you keep more of your investment returns over the long term. While differences in costs may appear small if they are fractions of a percent, the power of compounding means this can make thousands of pounds worth of difference to the value of your end pot and what you can do with it.”
5) Chasing past performance
“A share or company that's done well recently might look like a safe bet going forward. But top performers often attract attention after the big gains have already happened, meaning that investment could be overvalued or become a target for existing investors looking to sell and bank any profits,” Young said.
If you’re unsure how to research a particular stock or company, passive investing might be a better option, she added. A passive fund, sometimes known as a tracker, simply looks to replicate the performance of an underlying group of investments. “As well as spreading risk, passive funds are low cost and will save you research time. And while they’ll never beat the index they are tracking, that could still mean higher returns versus trying to pick your own portfolio,” Young said.
Where can you find out more information about investing?
Throughout this article we’ve linked to descriptions of terms that might seem confusing for beginner investors, but for a more complete list of financial terms and descriptions, see MoneyWeek’s financial glossary.
Some good reads for beginner investors include:
- Invest Now by Kalpana Fitzpatrick
- A Random Walk Down Wall Street by Burton Malkiel
- The Psychology of Money by Morgan Housel
Keep educating yourself to improve your investing confidence. You don’t need to become a market expert overnight but understanding the basics will help you feel more confident in getting started.
How finance companies and the government are supporting beginner investors
April 2026 marked the launch of the ‘Invest for the Future’ retail investment campaign – a government-backed, industry-funded, multi-year national initiative designed to improve confidence and understanding of investing and help more people see it as a relevant and accessible option for their long-term financial plans.
The campaign brings together 20 of the UK’s leading financial services firms – including the likes of Hargreaves Lansdown and J.P. Morgan Personal Investing – with support from HM Treasury, the Financial Conduct Authority (FCA) and the Money and Pensions Service (MaPS).
It is the first coordinated, industry-wide effort of its kind. The aim is to address the UK’s long-standing gap between saving and investing, and support the development of a more confident, long-term investing culture in Britain.
“By bringing together firms from across the financial sector with a shared goal, we aim to make investing more accessible and give people better support when it comes to taking their first steps,” said Sasha Wiggins, chief executive of Barclays Private Bank and Wealth Management, who chairs the campaign.
“This campaign is about providing clear, accessible information so everyone can feel confident in deciding whether investing is right for them,” Wiggins added.
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Dan is a financial journalist who, prior to joining MoneyWeek, spent five years writing for OPTO, an investment magazine focused on growth and technology stocks, ETFs and thematic investing.
Before becoming a writer, Dan spent six years working in talent acquisition in the tech sector, including for credit scoring start-up ClearScore where he first developed an interest in personal finance.
Dan studied Social Anthropology and Management at Sidney Sussex College and the Judge Business School, Cambridge University. Outside finance, he also enjoys travel writing, and has edited two published travel books.