Investing For Beginners

We all have financial goals. You may be saving towards long-term goals such as living comfortably in retirement or significant life events such as buying a home or getting married. Whatever your goals are, investing in the stock market can be a great way to grow your money and can offer you higher long-term returns than leaving your money in a savings or current account. According to a 2019 Barclays Equity and Gilt survey, shares do better than cash nine times out of ten over a period of ten years. This reduces to seven times out of ten when investing for just five years. People often ask how much money can be made in the stock markets. On average, you could make about 5 - 12% a year, but there are no guarantees.

Before you invest, it is crucial to consider your wider financial position. This might include paying off any outstanding debts and building an emergency fund. Suppose you have £4,000 outstanding on a credit card charging interest at 19%, it will cost you £760 a year to pay back the debt. Your investments are unlikely to match this return, so it may be wise to pay off the credit card debt and other expensive debts before investing. You might also want to build an emergency fund. We recommend saving three times your monthly living expenses in a readily accessible savings account. Naturally, the actual amount you choose to set aside might differ from this, depending on your circumstance.

We’ve prepared this guide to give you the confidence necessary to take your first step into investing. We focus primarily on investing in the UK stock markets and are confident that if you read the entire page, you should be able to start investing immediately.

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The Details

Stocks & Shares ISA: Top Picks

We've put together a list of some of the top investment providers. These are providers who score high on affordability or service quality or both. We've also split the providers into three categories based on the level of help they'll offer you. These categories are "Do It For Me (DIFM)," "Do It With Me (DIWM)," and "Do It Yourself (DIY)." For all providers listed in each category, your money is protected by the Financial Services Compensation Scheme (FSCS). This means you could get your money back up to £85,000 if any of the companies goes bust. Use the tabs below to learn about each category. Alternatively, view our full price comparison tables here.

This is ideal for either beginners or those who want all the hard work done for them. With DIFM platforms, you’ll often be presented with a limited set of investment choices based on your attitude to risk, investment goals and how much you plan to invest. Depending on the platform you choose, you may have access to formal financial advice. We’ve only listed 3 DIFM providers here, but there are many of them out there.  Note, DIFM providers are mostly robo-advisers. Compare Nutmeg, Wealthify and OpenMoney below:

ISA Providers

Highlights

Minimum ISA Deposit

Charges

Nutmeg has three different investment styles for you to choose from - socially responsible, fully managed and fixed allocation. Nutmeg also offers pensions, LISA and JISA.
£500
Annual Platform Fee: 0.25% - 0.75%

Annual Investment Cost: 0.23% - 0.38%

Transfer Out Fee: £0
Wealthify allows you to choose your risk level, from cautious to adventurous, then it builds an investment plan to match that risk level. Wealthify also offers ethical portfolios, pension and JISA.
£1
Annual Platform Fee: 0.6%

Annual Investment Cost: 0.22% - 0.66%

Transfer Out Fee: £0
OpenMoney works out to be the cheapest here. It is still very small but has a nice mix of investments. It also offers formal personalised financial advice. OpenMoney offers pensions.
£1
Annual Platform Fee: 0.35%

Annual Investment Cost: 0.11% - 0.14%

Transfer Out Fee: £0

This is ideal for people who are happy making their own investment decisions but require a bit of help getting there. The DIWM platforms do not give you advice but offer some guidance that could help you understand your attitude to risk, and then provide ready-made investments that match your risk level. We’ve only listed 3 DIWM providers here, but there are quite a number of them out there. Compare Cavendish, AJ Bell and Vanguard below:

ISA Providers

Highlights

Minimum ISA Deposit

Charges

Cavendish is a low-cost platform with over 3,500 funds, investment trusts and ETFs. It has several "Do It With Me" or model portfolios for you to choose from. Cavendish is a cheap way to access Fidelity funds, and it also offers pensions and JISA.
£0
Annual Platform Fee: 0.25% for less than £200k; 0.2% for £200k+

Fund Management Fee: varies per fund

Fund Dealing: £0 (£10 for shares, ETFs or ITs)

Transfer Out Fee: £0
AJ Bell offers a wide range of investments including stocks and shares, over 2,000 funds (unit trusts and OEICs), ITs and ETFs. It also provides four ready-made portfolios - cautious, balanced, adventurous and income. In addition, AJ Bell offers pensions, LISA and JISA.
£500 lump sum
or £25/month
Annual Platform Fee: 0.25% for less than £250k; 0.1% for £250k - £1m; 0.05% for £1m - £2m; 0% for £2m +

Fund Management Fee: varies per fund

Fund Dealing: deal from £1.50 and never pay more than £9.95 per online deal

Transfer Out Fee: £25 per holding
Vanguard works out to be the cheapest here, but you are limited to investing in only its 75+ funds. It gives you the option to choose from its ready-made portfolios or to build your own. Vanguard also offers pensions, LISA and JISA.
£500 lump sum
or £100/month
Annual Platform Fee: 0.15% (max £375)

Fund Management Fee: 0.20% (avg.)

Fund Dealing: £0

Transfer Out Fee: £0

This is ideal for people who know what they are doing. With DIY platforms, you'll have access to a wide range of investments, and in some cases investment ideas or suggested fund lists. But you have to choose your investments and build your portfolio yourself. This requires a bit of research on your part, so it is important you know what you are doing. You should have clear goals, know your risk appetite and understand how to build a portfolio. We’ve only listed 3 DIY providers here, but there are quite a number of them out there. Compare iWeb, Interactive Investor and Vanguard below:

ISA Providers

Highlights

Minimum ISA Deposit

Charges

iWeb is part of Lloyds Banking Group and operated by Halifax Share Dealing. The website isn't exactly beautiful, but the service is quite cheap, and it has over 2000 funds. iWeb also offers pensions.
£0
Platform Fee: £25 (one-off)

Fund Management Fee: varies per fund

Fund Dealing: £5/deal

Transfer Out Fee: £25
Interactive Investor has more than 3800 funds and 40,000+ UK and global investment options. There are three plans available, and it charges a fixed monthly fee on each. Interactive Investor also offers pension and JISA.
£25
Investor Plan: £9.99 per month platform fee, comes with one free trade (funds or shares). Extra trades are £7.99 per trade

Funds Fan: £13.99 per month platform fee, comes with two free fund trades. Extra fund trades are £3.99 and share trades are £7.99 per trade

Super Investor: £19.99 per month platform fee, comes with two free trades (funds or shares). Extra trades are £3.99 per trade

Regular Investing: No charge
Vanguard is affordable, but you are limited to investing in only its 75+ funds. It gives you the option to choose from its ready-made portfolios or to build your own. Vanguard also offers pensions, LISA and JISA.
£500 lump sum
or £100/month
Platform Fee: 0.15% (max £375)

Fund Management Fee: 0.20% (avg.)

Fund Dealing: £0

Transfer Out Fee: £0

View full price comparison tables here.

One more thing...

Important❗️
We are not regulated to give you financial advice, so we kindly ask that you not take the information on our website, online community or social media pages as advice. If you think you will need someone qualified to help you make financial decisions such as what to invest in, we strongly recommend you seek advice from a suitably qualified financial adviser. There are a few websites where you can find advisers. Have a look at Unbiased or VouchedFor.

You might also like 🤓
Investing in Funds
Investing in Shares
Stocks and Shares ISA
Auto-investing Apps
Compare ISA Charges (Funds)
Compare ISA Charges (Shares)
Platform Charges Directory

Credits 🙌
DIFM-DIWM-DIY Framework from The Lang Cat
The London Stock Exchange

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