Investments
A quick overview of investments
Investing is the process of putting your money into assets; such as stocks, bonds, property, or funds, with the goal of growing your wealth over the long term. Unlike cash savings, investments offer the potential for higher returns that can outpace inflation, though they come with varying levels of risk.
You can read more about how it works in our investment advice article.
Key features of investments
The key components of investing and the general rules around it are:
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Can be started with a one-off lump sum or regular monthly contributions
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Gains are often achieved through capital growth (increase in asset value) or income (dividends and interest)
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Investments are typically held within tax-efficient ‘wrappers’ like Stocks & Shares ISAs
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Compounding allows your returns to earn their own returns over many years
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Portfolio diversification helps manage risk by spreading money across different industries and regions
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Values can go down as well as up, meaning you could get back less than you put in
Eligibility criteria and risk factors
To start investing in the UK, you generally need to be a UK resident and at least 18 years old, though Junior ISAs can be opened for children by a guardian. You will need a UK bank account and a National Insurance number for tax-wrapped accounts. Most platforms have a minimum entry point, which can be as low as £1 to £25 for digital ‘robo-advisors’ or significantly higher for bespoke wealth management.
This table highlights the factors that impact an investment’s performance and the level of risk involved.
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Factor |
Impact & Key Provider Checks |
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Risk Tolerance |
Providers assess your ‘appetite for risk’ to ensure your portfolio matches your comfort level with volatility of performance |
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Time Horizon |
Investing is usually recommended for a minimum of 5 years to allow time to recover from market fluctuations |
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Platform Fees |
Management fees, platform charges, and trading costs can significantly reduce your net returns over time |
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Asset Allocation |
The mix of equities (higher risk) vs. bonds or cash (lower risk) is the primary driver of your portfolio's stability |
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Inflation |
To build real wealth, your investment return must exceed the current rate of inflation |
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Tax Status |
Using an ISA or Pension wrapper prevents Capital Gains Tax (CGT) and Dividend Tax from eating into your profits |
Featured Articles
Investment Advice
Expert advice about ISAs, bonds, unit trusts and more
Lifetime ISAs
All you need to know about lifetime ISAs
Getting a Mortgage With Investment Income
Getting a mortgage based on investment income
Investment Property
A guide to mortgages for investment properties
Transferring a Pension into an ISA
How to transfer a pension to an ISAFAQs
Saving involves putting money into cash-based accounts (like a high-street savings account) where your principal is secure and earns a fixed or variable interest rate. Investing involves buying assets that fluctuate in value. While saving is safer for short-term goals or emergency funds, investing historically offers much higher potential for long-term growth and protecting your money from inflation.
Get 100% independent advice about your investments
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