Always remember that investments can go down as well as up in value, so you could get back less than you put in. A rule of thumb is to hang on to your investments for at least five years to give them the best chance of providing the returns you want.

Investing for Beginners - How to Invest in Stocks in the UK

Updated On: Feb 20, 2024
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Investing for Beginners UK

Contents:


Best Investment Platforms for Beginners

At Koody, we divide investment platforms into three categories based on the type of service and level of support or guidance they offer. The three categories are:

  1. Robo Advisors
  2. Trading Apps
  3. Investment Platforms

1. Robo Advisors

Robo advisors are technology companies that provide automated financial planning with little or no human supervision. Their products include ready-made investments, managed portfolios, financial advice, and micro-investing services (spare change round-ups and automatic investing).

Robo advisors are excellent for beginner investors or those who want to avoid the complexities associated with selecting individual stocks, shares, and other investments.

Please remember that when you invest, your capital is at risk. ISA, pension, and tax rules also apply.

Here are some of the best robo advisors for beginners in the UK:


Moneybox - Good for automatic investing (round-ups, spare change)

Moneybox
Account Type
DIY & Ready-made
Dealing Fee
£0
(+ 0.45% FX fee on US Stocks)

Annual Platform Fee
0.45%
(Plus £1 per month subscription fee
(first three months free))

Minimum Deposit
£1

Moneybox is a UK investment app that allows you to invest in a range of tracker funds, exchange-traded funds (ETFs), exchange-traded commodities (ETCs) and US stocks. Moneybox offers two forms of investing depending on your investment savviness, investing strategy and attitude to risk. Beginner investors or those who prefer a ready-made portfolio can choose from the three ready-made portfolios on offer - Cautious (lower risk), Balanced (medium risk) and Adventurous (higher risk). Advanced or more confident investors can pick from the range of tracker funds, ETFs, ETCs and US stocks available and build their portfolios themselves.

The Moneybox app also empowers you to invest your spare change by rounding up your card transactions to the nearest pound and investing the difference on your behalf. For example, if you spend £2.30 on a snack, Moneybox will invest 70p for you. You can also instruct the app to make weekly or one-off deposits into your investment portfolio as it rounds up your spare change.

You can start investing with Moneybox with as little as £1. Moneybox offers commission-free trading on US stocks. However, fund management fees apply to other types of investments, ranging from 0.12% to 0.61% per annum. A currency conversion fee of 0.45% also applies to US stocks. Moneybox’s suite of products includes a Stocks and Shares ISA, Lifetime ISA, Junior ISA, Personal Pension, and General Investment Account.

Capital at risk.

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Wealthify - Good for beginners who prioritise ethical investing

Wealthify Logo
Account Type
Ready-made
Annual Fund Management Fee
0.16% - 0.70%
Annual Platform Fee
0.60%
Minimum Deposit
£1

Wealthify is a UK robo advisor that allows you to choose from five investment plans based on your attitude to risk. These investment plans are named Cautious, Tentative, Confident, Ambitious and Adventurous and allow you to choose a risk level that best suits your needs. If you are conscious about the environment or would simply like to invest in line with your values, Wealthify’s five portfolios are also available as ethical investment plans, so you can stay true to your values while potentially growing your money.

With Wealthify, the minimum investment is £1, and you can withdraw your money anytime. There is an annual platform fee of 0.60%, and fund management fees range from 0.16% to 0.70% per year, depending on your chosen investment theme. Once you complete the signup process, you can start investing with a lump sum of £1, which you can top up as frequently as you want.

Wealthify’s suite of products includes a General Investment Account, Stocks and Shares ISA, Junior ISA and SIPP in both Original and Ethical themes.

Capital at risk.

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Moneyfarm - Good for beginners with a long-term passive strategy

Moneyfarm Logo
Account Type
Ready-made
Annual Fund Management Fee
0.20%
Annual Platform Fee
0.75% - 0.35%
Minimum Deposit
£500

Moneyfarm is a UK robo advisor that provides you with a personalised investment plan based on your risk preferences and goals. With Moneyfarm, you can invest in one of seven risk-rated portfolios recommended to you based on the result of an online assessment. Each portfolio comprises a mix of cost-efficient exchange-traded funds (ETFs) and other passive index trackers. Moneyfarm also offers ethical or ESG investment options for those who want to invest in line with their values.

Moneyfarm’s customers benefit from free and personalised digital financial advice from Moneyfarm’s investment consultants, and you can chat, phone, email, or meet your consultant in person. To get started, you will be asked to complete a short survey so that Moneyfarm can better understand how you approach your finances before matching you to your investment portfolio and consultant.

You can start investing with Moneyfarm with as little as £500. Moneyfarm charges an annual management fee depending on how you choose to invest, ranging from 0.75% to 0.35% on the total value of your portfolio. An annual fund management fee of 0.20% (average) also applies to all portfolios. This is built into the cost of the ETF or tracker fund on any given day, so you will not see fund charges being deducted from your portfolio directly. Moneyfarm’s suite of products includes a Stocks and Shares ISA, Junior ISA, General Investment Account, and Personal Pension.

Capital at risk.

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2. Trading Apps

Trading apps allow you to buy, sell, and manage investments such as shares, bonds, funds, ETFs, and leveraged products, such as contracts for difference (CFDs). Unlike robo advisors, they do not provide financial advice or any form of guidance. Their services are aimed at people who are happy picking out individual stocks and shares and making their own investment decisions.

Please remember that when you trade, your capital is at risk. ISA, pension, and tax rules also apply.

Here are some of the best trading apps for beginners in the UK:


XTB - Good for leveraged products, like stock and ETF CFDs or forex

XTB logo
Account Type
DIY
Dealing Fee
£0
Annual Platform Fee
£0
Minimum Deposit
£0

Earn up to 4.9% annual interest on uninvested cash

XTB is an easy-to-use, fully-customisable European trading platform that allows you to trade and invest in over 3,000 real shares from 16 major exchanges around the world. The platform provides traders instant access to hundreds of global markets and over 5,600 instruments, including UK and overseas stocks and shares, ETFs, forex, indices, commodities, stock CFDs, and ETF CFDs.

With XTB, you can trade using the in-house trading software, xStation, or via MetaTrader 4 (MT4). xStation by XTB is a powerful trading software available on iOS, Android and desktop devices and suitable for both beginners and advanced traders. The xStation trading software provides comprehensive charting and risk management tools. XTB also provides an extensive library of educational materials, including videos, webinars, and courses suitable for beginners and experienced traders. When you sign up, you will have access to a dedicated account officer who will work with you to help you better understand your needs and how XTB operates.

It is free to open a trading account with XTB, and all users have access to a free demo account with £100,000 in virtual funds that you can use to practise trading and investing until you become confident enough to use real money. Deposits in GBP and EUR are free of charge, but withdrawals below £60 have a £12 processing fee. Real stock trading is commission-free for monthly turnover up to €100,000 (£85,000). Transactions above this limit will attract a commission of 0.2% (minimum €10 (£8.50). Stock and ETF CFD trading are also commission-free. Other fees apply. XTB does not offer an ISA or SIPP.

Please note: Contracts for Difference (CFDs) are leveraged products and carry a significant risk of loss to your capital, as prices may move rapidly against you, and you may be required to make further payments to keep any trades open. Between 74 and 89% of retail investor accounts lose money when trading CFDs. These products are not suitable for all clients. Therefore, please ensure you fully understand the risks and seek independent advice.

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Freetrade - Good for beginners with little money to invest

Freetrade
Account Type
DIY
Dealing Fee
£0
(+ 0.99% FX fee)
Annual Platform Fee
£0 - £144
Minimum Deposit
£2

Freetrade is a UK mobile trading app that gives you access to thousands of UK and overseas stocks, ETFs, REITs, and investment trusts covering different sectors and markets worldwide. The Freetrade app can be accessed on iOS, Android and desktop devices and offers a slick and easy-to-use user interface and experience. The app is a great choice for both beginners and experienced investors.

With Freetrade, you can invest in fractional shares of even the most expensive US shares with as little as £2. Depositing, trading and withdrawing on Freetrade are commission-free (other charges may apply). FX rates apply to US stocks at the spot rate + 0.99%. To get the most out of Freetrade, you can choose from three subscription plans. The Basic Plan costs £0.00 per month and allows you to open a General Investment Account (GIA) and trade commission-free. The Standard Plan costs £5.99 per month and allows you to open a Stocks and Shares ISA in addition to your GIA. With the Plus Plan at £11.99 a month, you get a Self-Invested Personal Pension (SIPP) and a Stocks and Shares ISA in addition to your GIA. Dealing on Freetrade is commission-free, irrespective of your subscription plan. Freetrade’s suite of products includes a Stocks and Shares ISA, General Investment Account (GIA) and SIPP.

Special offer: Get a free share worth £10 when you join Freetrade and fund your account with at least £50.

Please note: When you invest, your capital is at risk. The value of your investments can go down as well as up, and you may get back less than you invest. ISA rules apply. SIPP eligibility and tax rules apply. Free share terms and conditions apply.

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3. Investment Platforms

An investment platform, otherwise known as a fund supermarket, allows investors to buy, sell, and hold a range of investments in one place, including shares, funds, bonds, commodities, property, cryptocurrencies, CFDs, forex, options, warrants, futures, and so much more.

You can think of an investment platform as a combination of robo advisors, trading apps and much more. They are quite powerful, and you can buy and sell almost any type of investment with them.

Please remember that when you invest, your capital is at risk. ISA, pension, and tax rules also apply.

Here are some of the best investment platforms for beginners in the UK:


eToro - Good for beginners who want fractional shares and ETFs

eToro Logo
Account Type
DIY & Ready-made
Dealing Fee
N/A
Annual Platform Fee
N/A
Minimum Deposit
US$100 (£80)

Earn up to 5.3% annual interest on uninvested cash

eToro is a multi-asset investment platform that offers both investing in stocks and cryptoassets, as well as trading CFDs. With eToro, UK traders have real-time access to thousands of stocks, ETFs, indices, commodities, forex, cryptocurrencies, and NFTs from top exchanges worldwide. Catering to beginners and expert traders, eToro provides an impressive range of fundamental and technical analysis tools, including market news, economic data, social media trends, news sentiment trends, and advanced charting tools.

If you are new to investing or prefer a more hands-off approach, eToro offers over 40 fully allocated, balanced, ready-made investment portfolios that focus on different market segments you can understand and to which you can relate. Some of the portfolios include MetaverseLife, BigTech, GoldWorldWide, Vaccine-Med, BitcoinWorldWide, Diabetes-Med, Driverless, GigEconomy, and many more. These portfolios are a grouping of several assets, such as stocks, cryptocurrencies, ETFs, and even people, bundled together based on a predetermined theme or strategy.

It is entirely free to open an account with eToro, and all registered users receive a US$100,000 demo account for free, which you can use to practise trading or investing until you become confident. Trading on eToro occurs in USD, so a currency conversion fee will apply if you deposit or withdraw a currency other than USD. Withdrawals incur a fee of US$5 (£4), and the minimum withdrawal amount is US$30 (£24). For UK customers, eToro offers an eToro Money app which allows you to convert your GBP to USD free of charge, thereby reducing your foreign exchange costs. eToro does not offer an ISA or SIPP.

Please note: Your capital is at risk. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Additionally, cryptoassets are highly volatile and unregulated in the UK. No consumer protection. Tax on profits may apply. Copy Trading does not amount to investment advice. Other fees apply. For more information, visit eToro.

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InvestEngine - Good for cost-conscious investors who prioritise ETFs

InvestEngine Logo
Account Type
DIY & Ready-made
Dealing Fee
£0
Annual Platform Fee
0% - 0.25%
Minimum Deposit
£100

InvestEngine is a low-cost ETF investment platform that provides a choice of managed portfolios tailored to you and commission-free DIY investing to help you build long-term wealth. Users can invest in over 500 exchange-traded funds (ETFs) from leading global asset managers.

With InvestEngine, you can invest in two ways depending on your tolerance for risk and savviness as an investor: beginner investors or those who prefer a ready-made investment portfolio can select from one of the Managed Portfolios on offer, where the team of experts at InvestEngine will take care of the day-to-day investment decisions for you. These portfolios are a selection of ETFs based on your preferences and risk tolerance. Once you’ve selected one, you do not have to do anything else besides monitor the performance of your investments. Advanced or more confident investors can choose from 500+ commission-free ETFs and build their portfolios themselves. InvestEngine also offers fractional investing, which allows you to buy bits and pieces of an ETF with as little as £1. This enhances your ability to build a diversified portfolio even if you have a small amount of money to invest. With the DIY Portfolio, there are no platform fees. All InvestEngine portfolios are free of setup fees, dealing fees, ISA fees or withdrawal fees.

InvestEngine stands out amongst its competitors as one of the cheapest investment apps in the UK because it charges no platform or management fees on its DIY Portfolio and just 0.25% a year on its Managed Portfolio. You can also start investing with as little as £100. InvestEngine’s suite of products includes a Stocks and Shares ISA, Personal Account and Business Account.

Capital at risk.

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Interactive Investor - Good for those who desire a UK-first experience

Interactive Investor
Account Type
DIY & Ready-made
Dealing Fee
£3.99
Annual Platform Fee
£60 - £240
(£4.99 - £19.99/month)
Minimum Deposit
£25

Earn up to 4.85% annual interest on uninvested cash

Interactive Investor, recently acquired by wealth management giant Abrdn, is the second-largest investment platform in the UK. It is well known for its fixed charges (as opposed to percentage-based fees like most other investment platforms) and has been providing investment services and financial information since 1995.

If you choose to invest with Interactive Investor, you will gain access to over 40,000 investment options, including UK and overseas shares, funds, investment trusts, and ETFs. This is the second-widest choice of UK and international investments offered by an investment platform in the UK. Interactive Investor allows you to build your portfolio in multiple ways depending on your investment goals, attitude to risk and personal preferences. Beginner investors or those who prefer ready-made investments can build their portfolios using Interactive Investor’s Quick-Start Funds, an easy way to start investing where you choose from six low-cost funds prepared by the team of experts at Interactive Investor. Advanced or more confident investors can choose from a wide range of funds and shares and build their portfolios themselves. Interactive Investor gives you access to 17 global stock exchanges, including exchanges in North America, Europe and Asia Pacific. These include markets such as the FTSE 100, FTSE 250, FTSE All-Share, S&P 500, NASDAQ, NYSE, Dow Jones and more. In addition to the above, Interactive Investor offers Japanese, Indian and Chinese shares in the form of American Depositary Receipts (ADRs).

Interactive Investor gives you a free trade every month, which you can use to buy or sell any investment. After that, trades usually cost £3.99. For those investing £50,000 or less, you can sign up for the cheapest plan (Investor Essentials), which costs only £4.99 a month but does not come with the monthly free trade. The platform also offers a free regular investing service that allows you to deposit as little as £25 a month towards your investments without paying a trading fee each time, irrespective of the plan you choose. Interactive Investor also has lots of expert ideas, research and insights, which can be helpful when selecting investments. Interactive Investor’s suite of products includes a Trading Account, Stocks and Shares ISA, SIPP and Junior ISA.

Capital at risk.

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What Is Investing?

Investing is a way of setting money aside with the expectation that your money will grow in value over time. When you invest, you are essentially putting your money towards assets in the hope that they will appreciate in the future.

As the value of your assets appreciates, you make positive returns on your investments and generate some income along the way. In the same way, the value of your assets could fall, and you could lose some or all of the money you invested.

Why Invest in Stocks and Shares?

We all have financial goals. For some, it might be saving towards long-term goals such as living comfortably in retirement. For others, it might be saving towards significant life events such as buying a home or getting married.

Whatever the goal, investing in stocks and shares 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 in any ten-year period. 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 market. On average, the value of your investment could rise by about 3 - 12% a year depending on a number of factors, but there are no guarantees.

The success or failure of your investment portfolio will usually depend on several factors, including:

  1. The number of assets in your portfolio.
  2. The extent of diversification of your portfolio.
  3. The performance of each asset.
  4. The length of time you hold each asset.
  5. The investment fees.

Apart from the value of your investments appreciating, you can also earn regular income from some of the companies you invest in when they make a profit. This income is called a dividend. A dividend is your share of a company’s profit.

As you progress in your investment journey, you will come across the phrase, “Past performance is not a reliable indicator of future results”. This is usually to let you know that sometimes your investments can fail and that no human or algorithm can predict how your investments will perform. A company’s past performance cannot guarantee its future success, so the onus is on you to do your own research before investing in the stock market.

What Is the Stock Market?

The stock market is a marketplace where shares and other assets are bought and sold. There are several stock markets around the world, and in the UK, the main exchange is the London Stock Exchange (LSE).

The LSE offers trading in shares from big names you’ll have heard of, such as Vodafone on its main market, to smaller companies, such as ASOS listed on the Alternative Investment Market (AIM), its junior market. Anyone can buy shares on the London Stock Exchange, but you need to go through a stockbroker (also called an investment platform, trading app, or robo advisor).

When you start investing in the stock market, you’ll come across market indices. In the UK, the main indices are the FTSE 100 (an index of the 100 largest companies on the LSE), the FTSE 250 (an index of the next 250 largest companies) and the FTSE All-Share (an index of all the shares listed on the LSE’s main market).

A market index is simply a group of shares of companies representing a particular segment. These companies are usually grouped by size and value.

Indices are used as benchmarks to gauge the movement and performance of market segments. For example, the FTSE 250 can be used to gauge the fortunes of the UK economy.


What Should a Beginner Invest in?

Beginners can invest in a variety of assets in the stock market. The major types of assets are stocks and shares, funds, bonds, commodities and property.

  1. Stocks and Shares: A share is a unit of ownership of a public company. When you buy a share, you own a tiny part of a public company. So, if you bought a share in Apple Inc., for example, you will become a part-owner of Apple. If it performs well, you’ll benefit from its success. If it doesn’t perform well, you may lose some money.

    Companies issue shares to raise money to fund their activities. People invest in shares to benefit from the successes of companies they believe in.

    You may also come across the word, stock or equity. In most situations, stocks, equities, and shares refer to the same thing. Stock could also mean all your shares in one or more companies.

  1. Corporate Bonds: When you invest in a corporate bond, you are lending money to a company in return for interest.

  2. Government Bonds: When you invest in a government bond or gilt, you are lending money to a government in return for interest.

  3. Commodities: When you invest in commodities, you are investing in precious metals (gold, silver), oil, agriculture, etc.

  4. Property: When you invest in property, as the name suggests, you are investing in real estate, usually commercial real estate.

  5. Funds: Instead of buying individual shares, bonds, property, commodities or other assets directly, you can choose to invest in a mutual fund.

    A mutual fund (or fund) gathers money from you and other investors, and a specialist fund manager invests this money in assets such as shares, bonds, property or commodities, saving you the trouble of buying shares in multiple companies or worrying about building a diversified portfolio.

    Investing in funds is generally considered safer and cheaper than investing in individual stocks, bonds or commodities since you share the risks and costs with other investors. Funds can be active (actively managed funds), passive (index funds), or traded on a stock exchange (exchange-traded funds (ETFs)).

    Most people, including experienced investors, use funds when investing.

How to Invest in Stocks in the UK

To invest in stocks in the UK, you’ll need to research and choose the stocks you want (e.g. Apple, Google, BP, Tesco, etc.), pick an investment platform, stockbroker, or financial adviser, and choose a tax wrapper.

Here is a step-by-step guide on how to start investing in stocks in the UK:

  1. Set aside an emergency fund equal to at least three times your monthly living expenses. Before investing, it is important to separate the money you want to invest from your emergency fund and everyday spending pot. An emergency fund prevents you from dipping into your investments if you find yourself in a major financial crisis like a job loss or severe health problem. It should be equal to at least three times your monthly living expenses and stored in a high-yield, easily accessible cash savings account like a Cash ISA or a standard easy-access savings account.
  2. Create an account with an investment platform or app, such as eToro or Freetrade. Creating an account with an investment platform is a straightforward process. It usually involves signing up via an online portal and providing personal information, like your name and address. It is important to research various platforms and compare their fees, products, and customer support before investing.
  3. Verify your identity and fund your account using a debit card or via bank transfer. After opening an account with a suitable platform, you’ll need to verify your identity and fund your account. The process usually involves submitting identification documents and depositing initial capital.
  4. Complete a W-8BEN form for tax purposes if you plan to buy US shares. As a UK investor, you’ll need to complete a W-8BEN form, which allows you to claim a reduced rate of withholding tax on any US-sourced income, such as dividends from Apple or Microsoft shares.
  5. Choose a tax wrapper, such as an ISA or SIPP. A tax wrapper shields your savings and investments from the taxman. When you use a tax wrapper, you’ll pay no taxes or a reduced amount of tax on the gains from your savings and investments held within the wrapper. Examples of tax wrappers in the UK are individual savings accounts (ISAs) and pensions. If you prefer not to use a tax wrapper, perhaps because you’ve already used up your ISA allowance for the tax year, you can choose to invest in a general investment account (GIA). A GIA also comes with some tax benefits.
  6. Research and choose some stocks and shares. When you are ready to invest, you’ll need to choose some companies to invest in and thoroughly research each of them. Most people start with the biggest and most popular companies in the world, as they are usually the safest and most reliable. Such companies could include the likes of Apple, Google, Microsoft, Amazon, Meta (Facebook), and Netflix. If you would rather not pick out individual stocks, it might be sensible to invest in index funds or ETFs.
  7. Create an investment strategy depending on how long you want to hold your investments. To become a successful investor, you must create an investment strategy that works for you. This typically involves building a diversified portfolio and managing risk. Most people create their own version of Bogleheads’ three-fund portfolio, while others simply invest in one index fund or ETF that tracks the whole world.
  8. Place your first “buy” order. Once your account is funded and you’ve carried out thorough research, you can place an order to buy your first investment. This involves entering the name of the product, such as “Netflix” or “$NFLX” for Netflix stock or “S&P 500” for the S&P 500 index fund or ETF. You’ll also need to specify the number of shares you want to buy or the amount you want to invest.
  9. Invest regularly to take advantage of pound-cost averaging. It is important to keep investing small amounts into your portfolio regularly if you are investing for the long term. Investing small amounts regularly is known as “drip-feeding” into your investment pot, and it can sometimes be better than investing a huge lump sum once. This investment strategy is often called dollar-cost averaging or pound-cost averaging.
  10. Monitor your portfolio and keep your emotions in check. Remember to monitor your investments and rebalance your portfolio when necessary. Additionally, the stock market can be volatile, and it’s easy to get caught up in the emotional rollercoaster of ups and downs. Remember that the market will always experience fluctuations, and it’s crucial to avoid making impulsive decisions based on fear or greed. Stick to your long-term investment plan and remain disciplined, even when emotions run high.


Frequently Asked Questions

1. What are the best investment platforms for beginners in the UK?

Here are the best investment platforms for beginners in the UK:

  1. Moneybox - Good for automatic investing (round-ups, spare change)
  2. Wealthify - Good for beginners who prioritise ethical investing
  3. Moneyfarm - Good for beginners with a long-term passive strategy
  4. XTB - Good for leveraged products, like stock and ETF CFDs or forex
  5. Freetrade - Good for beginners with little money to invest
  6. eToro - Good for beginners who want fractional shares and ETFs
  7. InvestEngine - Good for cost-conscious investors who prioritise ETFs
  8. Interactive Investor - Good for those who desire a UK-first experience

2. Can you lose more money than you invest?

No, you cannot lose more money than you invest in the stock market.

In the UK, there are protections for retail investors, which means you cannot lose more than you have invested, even when trading on margin. However, it is possible to lose everything you’ve invested.

If you are not trading on margin, the only time you really lose money in the stock market is when you are forced to sell your investments in bad years. However, if you can hold on to your investments even when the market takes a hit, things should improve in the following years, but there are no guarantees.

You may also lose money if you choose to invest in only one company and that company fails. Investing in just one company is the riskiest thing you could do in the stock market. Ideally, you should invest in a wide range of companies operating in different sectors across different geographies. Creating a diversified investment portfolio like this can be tricky; that’s why most investors, even the most experienced ones, use funds when investing.

3. Can you make a lot of money in stocks?

Yes, you can make a lot of money from investing in stocks, but you can lose a lot of money, too. Always remember that the stock market is not a place to create wealth. It is a place to grow your wealth.

The best way to create wealth is to build a company or get hired by an existing company. Depending on your circumstances, the business you build may create wealth for you passively or actively. As an employee, you create wealth actively by going to work and earning a wage.

The second-best way to create wealth is to cut your costs. It is the gap between your income and expenses that creates wealth. We cannot stress this enough. Do not let society pressure you into spending unnecessarily. If you need to track your expenses to better understand your spending habits, use our free budget app, Budget by Koody.

The third-best way to create wealth is to improve your skills. One of our favourite quotes is by best-selling author Hal Elrod. He wrote, “Your level of success will seldom exceed your level of personal development because success is something you attract by the person you become.”

It is when you have created wealth that you may invest and grow your wealth in the stock market. Wealth can be anything from £1 to £1 billion or more, depending on your circumstances. Today, many investment platforms will allow you to start investing with as little as £25 per month. Some even accept £1 per month.


4. How do I research what to invest in?

There are many ways to research what to invest in. We recommend the following websites for company news, research, and commentary: Motley Fool, ADVFN, Hargreaves Lansdown, Interactive InvestorCNBC, The FT, and Reuters. Additionally, have a look at this Spot the Dog guide by Bestinvest - it shows underperforming funds that you probably want to avoid.

5. How much money should a beginner invest for the first time?

As a beginner investing for the first time, you can invest as much or as little as you feel comfortable with. Most investment platforms and robo advisors will allow you to start investing with as little as £25 a month, and some even accept £1 a month.

6. What are the best stocks for beginners with little money in the UK?

Beginner investors with little money can start by investing for the long term in low-cost global or total-market index funds and ETFs. An index fund is a broad portfolio of stocks or bonds in publicly listed companies that tracks the performance of a market index, whereas an ETF is an investment fund that trades on a stock exchange like an individual stock.

Both index funds and ETFs offer significant diversification benefits and have very low fees, ranging from 0.05% to 1.00% of the total value of your investment portfolio.

There have been many instances of prominent investors, including Warren Buffet, advising everyday investors to buy index funds and ETFs instead of picking individual stocks and trying to time the market. Some of these seasoned investors have even gone as far as saying, “The single best choice for a lifelong holding is a total stock-market index fund.”

Investing in passive index tracker funds and ETFs is one of the best ways to start investing in the UK, and the best investment platforms for beginners will offer a wide range of index funds and ETFs.

Here, you can view the five-year performance of some of the best index funds and ETFs in the UK.

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Credits

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  2. MoneyHelper
  3. London Stock Exchange

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Every month, we’ll send you The Plug - a curation of the best personal finance content in the UK. We share real-life stories, how-to guides, top personal finance news, popular community questions, and tips to help you stay on top of your money.

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