How to start investing

Investing your money is one of the most reliable ways to build wealth over time. But as a newbie to the investment world, you could risk losing all your hard-earned cash if you get it wrong. 

Don’t worry, we know how confusing it can be! That’s why we’ve put together this guide to show you how to start investing the right way. 

We’ll cover:

  • Investing: what it is and how it works
  • How to start investing in the stock market
  • How to be successful with your investments

Investing: what it is and how it works

Investing means putting some of your money aside for the future and making it work for you. When you invest, you buy into something you think will be worth more down the road.

For example, you might buy shares in an up-and-coming company. As the company grows and increases in value, so do your shares. This means your money will grow without you needing to lift a finger. 

On the flip side, if the company goes bust, the value of your shares will plummet, and you’ll lose some or all of the money you invested. It’s important to bear this in mind before you spend your money. 

You can invest in almost anything from gold, property and business shares to art, wine, or cryptocurrencies. 

That said, most beginners start investing in the stock market, so that’s what we’ll focus on in this guide. 

How to start investing in the stock market

By following the steps below, you’ll have the basic knowledge you need to start investing today. 

Step 1: Learn the terms and definitions

Before we get into the part about actually investing, let’s take a look at some terms you’ll need to know before you dive in. 

Asset allocation

This is a strategy where you split your investments between various types of assets to balance the risk in your portfolio (your collection of investments). 

Stocks and shares‍

Buying a share means you own a small part of a public company. Stocks, equities and shares often refer to the same thing. Although, ‘stocks’ also refer to all your shares in one or more companies. 


When you invest in a bond, you lend money to a company or government in return for interest on their profits.


Investing in commodities means you pay into precious metals (gold, silver), oil, agriculture, etc. 


As the name suggests, this is where you invest in real estate properties.


You can also choose to invest in a mutual fund, which gathers money from you and other investors that a specialist fund manager invests in different assets. 

Investing in funds is easier and safer since you don’t have to worry about building a portfolio, and the risk is split between you and other investors. 


This is a sum of money that companies pay their shareholders from their profits. The bigger your share, the more dividends you get.

Now that you’re familiar with the key terms, you can move on to the next step. 

Step 2: Identify your goal

Next, you need to decide what you hope to achieve by investing. Do you want to save money to buy a house, for retirement, or something else?

The best way is to divide your goals into short, medium and long-term goals, then decide how much money you want to save for each. 

Settle on your risk level

The level of risk in investments is essentially how much money you stand to lose if things go south. Your options are low-risk, medium-risk, and high-risk investments.

For example, if you’re saving for a long-term goal like retirement, you can typically afford to take more risk. That’s because you have plenty of time to make back any money you lose. 

On the other hand, if your investment is for the short term (up to five years) and you can’t afford to lose a lot of money, you’re better off taking a low-risk approach

Step 3: Choose an investment platform

There are tons of different platforms and apps you can use to start investing.

The most popular platforms in the UK include:

When choosing a platform, it’s important to consider your goals to help you find one that’ll help you reach them more easily. 

A simple Google search will give you plenty of articles that compare different platforms. So do some research to make sure you find the right platform for you. 

Step 4: Select a tax wrapper

Tax wrappers reduce the amount of tax you pay on your investments. Here are some examples:‍

Stocks and shares ISA

This one lets you invest in your tax-free ISA allowance (£20,000 in 2022) in qualifying investments like shares, bonds and funds. You won’t get taxed on any money you make on your investments as long as you invest less than £20,000.

Lifetime ISA

This one is open to adults aged 18–40 and lets you save up to £4,000 a year towards your first home or retirement. On top of that, the government will add a 25% bonus to your savings every year of up to £1,000.


You can get tax relief from the government when you pay into a pension, but you can’t access the money until you’re 55. Then, you can take 25% as a tax-free lump sum.

Self-invested personal pension (SIPP)

This one offers the same tax advantages as other pensions, but you get more freedom to choose the underlying assets. 

How to be successful with your investments

Congratulations! You’ve started investing. Now, here are a few things to do to help you stay on the right course. 

Keep track of news and share prices

To find success when investing, you’ll need to follow the progress of the stocks and shares you bought. That way, you’ll know when it’s time to sell them to avoid losing money. 

You can sign up for news alerts from the companies you invested in and use your investment platform to keep track of their share prices. Financial websites like The Motley Fool also help you stay informed about any changes. 

It’s also good to review your investment portfolio regularly to help you maximise your profits even as the market changes. 

Tip: Jot down some notes about the companies, commodities, governments, etc., you chose to invest in. That way, you can go back and measure their progress. 

Keep your records for tax purposes

You’ll also want to keep hold of any contract notes you get for buying or selling shares, along with the transaction history.

Basically, keep any records covering:

  • Cash going in and out.
  • Dividends received.
  • Profits and losses made.

Why do I need to keep this information? You might need it to measure your investing success. Plus, you’ll need to include it in your Self Assessment tax return

Bonus tip! Need a simple way to keep track of your business records to make tax season easier? Countingup is a combined business account and accounting software that lets you manage all your business finances in one place.

This handy tool is full of features that help you keep your records organised and manage your finances more efficiently

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