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What is the best way to invest your money?

Investing can earn you better returns than a savings account, but it puts your money at risk. Here are the different ways you can invest your cash.
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Your capital is at risk. Your investments are not guaranteed; they can decrease in value as well as increase and you may not get back the full amount you put in.

Do it yourself

If you want to decide how your money is invested, you can buy shares yourself and create your own portfolio.

You should only try this if you understand the risks, and know how the stock markets work.

Share dealing

You can open a share dealing account with a broker to buy shares in companies you want to invest in, e.g. BP or Vodafone.

It is up to you how much control you have. You can:

  • Get advice on which shares to buy or sell

  • Have no guidance from the broker

  • Let the broker make all trades for you

When you buy shares, you could make a profit through the dividends paid by the companies you invest in, or by selling your shares for more than you bought them for*.

* Subject to trading charges and fees.Here is how share dealing worksWhat is a dividend?

Let an expert invest for you

If you want to leave your money in the hands of a professional, you could invest in a grouped investment. Your money is added to other people's cash and invested on your behalf by a fund manager. Here are the different types of grouped investments you could choose:


An OEIC (open ended investment company) lets you invest in the shares of companies.

Open ended means there is no limit to the number of shares you can buy in a company.

Your money is added to one large pot with other investors' cash, which means the fund manager can invest in a wider range of assets.

This spreads the risk, because it means your money will be invested in several different assets.

It also means the fund manager can make investments you could not make on your own.

More information on how OEICs work

Unit trusts

This is an open ended investment, that let you buy units in the trust.

You can either invest a lump sum in a unit trust, or save at set amount each month.

Find out more about unit trusts here

Investment trusts

An Investment trust is a listed company you can invest in. The company then use your money to buy assets and shares in other companies.

It is closed ended which means there is a limited number of shares that you can buy in an investment trust.

Here is everything you need to know about investment trusts

Invest without paying tax

You can invest using your ISA allowance to make it tax efficient. There are two ways you can invest with your ISA:

  • Managed ISAs: You choose how much risk you want to take and what the aim of your investment is, e.g. growth or income, and your money will be invested for you by a fund manager.

  • Self invested ISAs: You choose where your money is invested, including funds, shares, bonds or investment trusts.

If you want to invest for your children's future, you could use a Junior ISA. Here is how Junior ISAs work.

Here is how stocks and shares ISAs work

Invest for your retirement

You could start a private pension to grow your money and give you an income when you retire.

There are two types of private pension you can invest in:

  • Personal pension plan: The pension provider invests in funds for you.

  • Self invested personal pension (SIPP): You choose which funds you want to invest in. Here is how SIPPs work.

Here is how to work out if you should invest in a pension

Investment alternatives

Peer to peer

Peer to peer savings is a way of lending your money to potential borrowers for a fixed return.

You add your money to a peer to peer provider's platform, and it is lent out to borrowers who pay it back with interest.

You can also invest your ISA allowance into peer to peer through an innovative finance ISA (IFISA). Here is how the IFISA works.

There is a risk you may not get your money back if the borrowers do not repay their loans.

Here is what you need to know about peer to peer savings

Savings accounts

Putting your money in a savings account or bond will not earn you much interest, but it is the safest place for your money.

The type of account you choose will depend on:

  • How much you want to save

  • What access you need

  • How long you can tie your cash up for

  • If you want to save tax free

Here is how to work out which savings account is right for you.