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Start your investment journey in 2025

Investments can be risky, but a long-term investing strategy could give greater returns than regular savings accounts

Find the best investment options for your needs

Hold a choice of investments and maximise your tax-free ISA allowance this year with an investment account
Compare stocks and shares ISAs
Choose the right pension scheme to ensure you're financially secure in retirement
Compare pensions
A SIPP is a pension plan where you have control and make the decisions of where to invest your pension savings
Compare SIPPs
Open a share dealing account to choose which shares you want, then buy and trade them to build your portfolio
Share dealing
Trustpilot
The value of investments can go down as well as up, so you may get back less than you put in. Your money is at risk.
Author
Lucinda O'Brien
Fact checker
Sara Benwell
Last updated
March 11th, 2025

Why should you invest instead of just save?

Investing can be a great way to help you grow your money over time and achieve your financial goals. Investments offer the potential for higher returns compared to simply letting your money sit in a low-interest savings account that may not keep up with inflation.

However, investing does come with risks. There is the possibility of loss of capital, but strategic investment decisions can produce significant long-term rewards. If you’ve already got to grips with building your savings and retirement, investing could be a smart next step.

The key is to balance potential gains with the risks involved, so it’s important to conduct thorough research and seek guidance from a financial advisor if needed. This will help you decide the most suitable place to invest your money.

What investments can you choose from?

High-interest savings accounts – for top rates on your emergency fund

High-interest savings accounts offer market-leading interest rates compared to regular savings accounts, making it easier to build your savings and reach short-term goals. They’re generally low-risk investments, allowing you to safely park your money for emergencies or big purchases. 

There are many types of savings accounts to choose from depending on your needs – including instant access accounts, notice accounts, cash ISAs and fixed-rate bonds.

Best for: those looking for better interest rates on their savings while keeping their money accessible in the short to medium term.

Find out more

Stocks and shares ISAs – for long-term, tax-free growth

Stocks and shares ISAs enable you to invest money in the stock market. They are ideal for those who have long-term financial goals, such as saving for retirement or purchasing a home. 

One of the main benefits of this type of investment account is that any returns generated within the ISA, whether from interest, dividends, or capital gains, are tax-free.

Best for: people who are looking to invest their savings in a variety of assets, such as stocks, bonds and funds, while minimising the impact of taxes on their investment returns.

Find out more

Pensions – for tax-efficient retirement savings

Pensions are long-term savings designed to provide income during retirement. The main benefit of pensions is that they offer tax advantages, allowing contributions to grow tax-free or with tax relief, depending on the type of pension scheme.

Additionally, many employers offer pension contributions as part of their employee benefits package, effectively boosting retirement savings. 

Best for: individuals who want to ensure financial security during retirement.

Find out more

SIPPs – for greater flexibility in retirement planning

SIPPs, or self-invested personal pensions, are a type of pension scheme that offers individuals greater control and flexibility over their retirement savings. The main benefit of SIPPs is the ability to invest in a wide range of assets and investors can tailor their pension portfolios to their specific investment goals.

Best for: those who are comfortable making their own investment decisions and want to take a more hands-on approach to managing their retirement savings.

Find out more

Share dealing – for hands-on investors seeking higher returns

Share dealing involves buying and selling shares of publicly traded companies on the stock market. The main benefit of share dealing is the potential for capital appreciation, as the value of shares can increase over time, allowing investors to profit from their investments.

Best for: those who are comfortable with taking on some level of risk in exchange for the potential for higher returns.

Find out more

Peer-to-peer lending – for people looking to diversify their portfolio

Peer-to-peer (P2P) lending is another way of investing, but instead you lend money to other people and businesses through an online platform. 

It connects lenders looking to earn higher returns with borrowers who need funds, cutting out traditional banks. Investors receive their money back with interest when the loan is repaid. 

Best for: people looking to diversify a small portion of their portfolio with ​​alternative investments and willing to take more risks.

Find out more

What investments can you choose from?

High-interest savings accounts – for top rates on your emergency fund

High-interest savings accounts offer market-leading interest rates compared to regular savings accounts, making it easier to build your savings and reach short-term goals. They’re generally low-risk investments, allowing you to safely park your money for emergencies or big purchases. 

There are many types of savings accounts to choose from depending on your needs – including instant access accounts, notice accounts, cash ISAs and fixed-rate bonds.

Best for: those looking for better interest rates on their savings while keeping their money accessible in the short to medium term.

Find out more

Stocks and shares ISAs – for long-term, tax-free growth

Stocks and shares ISAs enable you to invest money in the stock market. They are ideal for those who have long-term financial goals, such as saving for retirement or purchasing a home. 

One of the main benefits of this type of investment account is that any returns generated within the ISA, whether from interest, dividends, or capital gains, are tax-free.

Best for: people who are looking to invest their savings in a variety of assets, such as stocks, bonds and funds, while minimising the impact of taxes on their investment returns.

Find out more

Pensions – for tax-efficient retirement savings

Pensions are long-term savings designed to provide income during retirement. The main benefit of pensions is that they offer tax advantages, allowing contributions to grow tax-free or with tax relief, depending on the type of pension scheme.

Additionally, many employers offer pension contributions as part of their employee benefits package, effectively boosting retirement savings. 

Best for: individuals who want to ensure financial security during retirement.

Find out more

SIPPs – for greater flexibility in retirement planning

SIPPs, or self-invested personal pensions, are a type of pension scheme that offers individuals greater control and flexibility over their retirement savings. The main benefit of SIPPs is the ability to invest in a wide range of assets and investors can tailor their pension portfolios to their specific investment goals.

Best for: those who are comfortable making their own investment decisions and want to take a more hands-on approach to managing their retirement savings.

Find out more

Share dealing – for hands-on investors seeking higher returns

Share dealing involves buying and selling shares of publicly traded companies on the stock market. The main benefit of share dealing is the potential for capital appreciation, as the value of shares can increase over time, allowing investors to profit from their investments.

Best for: those who are comfortable with taking on some level of risk in exchange for the potential for higher returns.

Find out more

Peer-to-peer lending – for people looking to diversify their portfolio

Peer-to-peer (P2P) lending is another way of investing, but instead you lend money to other people and businesses through an online platform. 

It connects lenders looking to earn higher returns with borrowers who need funds, cutting out traditional banks. Investors receive their money back with interest when the loan is repaid. 

Best for: people looking to diversify a small portion of their portfolio with ​​alternative investments and willing to take more risks.

Find out more

What to consider before investing your money

The decision to invest your money shouldn't be taken lightly, and it's important to understand the risks involved before taking the plunge. Here, we look at the key factors you should consider.

  • Your risk tolerance

Understanding your risk tolerance involves assessing both your financial ability to withstand losses and how your mindset can handle market volatility. Factors such as financial goals and income stability all play a role in determining risk tolerance.

  • Your product knowledge

It's essential that you understand the products available for investment. This includes stocks, bonds, mutual funds and more. Having a strong grasp of these products allows you to make an informed decision based on their risk and market conditions.

  • Your timeframe

Your investment timeframe is how long you plan to hold your investments before needing the funds. It's an important factor in determining your investment strategy. Short-term investors may aim to profit from market fluctuations within months or a few years, often preferring assets like stocks or short-term bonds. Long-term investors focus on boosting money over decades, allowing them to experience market volatility but still potentially benefit from the compounding of returns.

  • Investment size

Investment size is the amount of capital you allocate to investment opportunities. It plays an important role in determining the level of risk and potential returns. Small investments may limit asset options, while larger investments offer greater flexibility and potential for growth.

Where to invest at every stage of your life

Under 40

Building an emergency fund  

To build a strong financial foundation, it’s sensible having some money saved up for emergencies. A high-interest savings account can help grow your funds while keeping them easily accessible.

Compare savings accounts

40-59

Investing for retirement

As you get older, it's important to secure your financial future. A self-invested pension plan (SIPP) lets you take control of your retirement pot by choosing where to invest it and how much risk to take.

Compare SIPPs

Over 60

Growing your nest egg

In your later years, preserving and growing your nest egg becomes a priority. A stocks and shares ISA offers the potential for higher returns than cash savings, helping your money keep up with inflation.

Compare stocks and shares ISAs

Saving vs investing: what beginners should know

Saving and investing are both ways of trying to make your money work harder, but there are important differences.

Saving

When you save, you deposit your money with a bank or building society, and in return they pay you interest. For instance, a bank might agree to pay you 5% of everything you set aside each year. The amount of interest is generally agreed in advance and could be either fixed or variable. 

If it’s fixed, you’ll know exactly what you’ll earn over the course of the year. Variable interest might change, for instance if the Bank of England changes its base rate. Your provider must tell you if it is putting rates up or down.

When you save, your capital is not at risk. You’ll get back all your original savings, plus any interest. However, it’s rare to find savings accounts that pay more than the rate of inflation. 

This means that over time, the cost of goods will rise more quickly than your savings and your purchasing power will be eroded. So, you need to save more than expected to meet your financial goals.

Investing

There are lots of different types of investments:

When you invest, you’re buying assets and these could be anything from stocks in Google to office buildings. The hope is that your investments will increase in value over time, so that you make a profit when you sell. 

You can also take a share of any profits the thing you’re investing in makes - known as dividends when it comes to stocks. Some investment strategies focus on this aspect, aiming to generate an income by buying shares in companies that pay dividends.

Of course, the things you buy could sometimes decrease rather than increase in value. If you sell after a stock has dropped in price, you could end up with less than you put in. 

Diversification: the smart way to spread investment risk

Since investments can fluctuate in value, most investors choose not to buy single stocks in just one company or asset, but instead to diversify across a wide range of assets. This helps to protect your portfolio from volatility. There are plenty of companies that will do this for you, either by actively picking a range of investments, or by mimicking one of the financial indexes, such as the FTSE 100.

While investments can be risky, especially in the short term, well diversified strategies typically outperform savings rates over the long term, helping to protect your money from inflationary rises.

Read more: What's an open-ended investment company (OEIC)?

The value of investments can go down as well as up, so you may get back less than you put in. Your money is at risk.

Understanding potential returns

Returns from investing can vary depending on your chosen investment, market conditions, and your individual investment strategy. Generally, investing in assets like stocks, bonds and real estate can provide potential returns ranging from modest to substantial - but this will be over a long-term period.

Remember, investing carries risks, and past performance is not indicative of future results. Therefore, you should carefully assess your risk tolerance and investment goals to make informed decisions about the expected returns.

If you would prefer a guaranteed return, then a savings account could be more suitable. Fixed-rate savings accounts offer a guaranteed interest rate so you'll know exactly how much you'll earn after the term. For example, if you deposited £5,000 into a one-year fixed-rate savings account offering 5% interest, you would earn £250 once the term ends.

Read more: How are investments taxed?

Pros and cons of investing

Pros

Usually beat savings returns over time
Can earn an income through dividends
If you invest through your pension you get tax relief

Cons

Your investments can go up and down, which can lead to stress
If you need your money when markets are down it won’t have time to recover
More knowledge is required than for saving

Take professional advice when you need it

If you would like to better understand how investing can help you meet your financial goals, it may be beneficial to get help from an independent financial adviser (IFA).

An IFA can advise you on all the financial products and investments that they think meet your needs.

For full details on how to find the right advisor for your circumstances, read our ‘Five steps to finding an IFA you can trust’ guide.

This content is for informational purposes only. Please talk to a qualified professional for advice relating to your specific needs before making any decisions. Investments can go down as well as up, and you may get back less than you invested.

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Investing FAQs: top questions answered

When should I start investing?

There’s no one-size-fits-all approach when it comes to starting investing – although the sooner you begin, the more you can maximize the power of compounding growth over time. In other words, the interest you earn on interest.

How do I know if I’m ready to invest?

As a rule of thumb, if you don’t have any short-term debts like credit cards or loans, have an emergency cash fund to cover rainy days, and are already saving regularly into a pension, it’s worth considering investing some of your money.

How much money do I need to start investing?

You don’t need a lump sum of money to get started. You can begin your investing journey with as little as £1, depending on the type of investment and provider. The key thing is that you’re comfortable risking an amount that won’t keep you up at night.

Starting small can be a great way to test the waters until you’ve got to grips with investing. It’s also worth noting that putting money away regularly – even just a few pounds per month – can make a big difference in the long term.


Where should I invest my money as a beginner?

Investing in a stocks and shares ISA should always be one of the first choices you consider. That’s because any returns you make are free from tax (the annual allowance is £20,000 for every UK adult). Plus, you have a wide range of investment options.

About the author

Author imageLucinda O'Brien
Lucinda O'Brien
Lucinda O'Brien has spent the past 10 years writing and editing content for regional and national titles. She applies her industry knowledge to ensure readers can make confident financial decisions.

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