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.
When it comes to investing, there are no guarantees. Past performance is not a reliable indicator of future results. Your investments can go down and up in value, so you could get back less than you put in. It is generally recommended that you hang on to your investments for at least five years, to give your investments the best chance of providing the returns you’re hoping for. Even if you wait five years, you might still get back less than you put in. It would help if you were comfortable with this before you begin.
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:
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:
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:
View full price comparison tables here.
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.