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How to start investing with no expert knowledge

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Financial investment has long seemed like a game for the super-rich and people already involved in the financial industry – because perceived wisdom is that you need big pockets and lots of knowledge.

These days, though, that’s not the case. You can start investing your cash if you’ve got a smartphone (opens in new tab), and it’s never been easier or faster to start making money with your money.

Despite that, knowledge is still power – so it’s worth reading up on the process before you start throwing your cash at stocks, shares and funds.

Our guide will help any beginner take their first steps into the world of investing. If you want more guidance for your career journey, here’s how to make money launching your own job site – and here’s how to perfect your elevator pitch

Should you invest? 

Many people see easy investment methods and bank-busting success stories and conclude that they should invest their money right away, but you should ask yourself some questions before you take any financial decisions.

The main factor? You need to ensure you’ve got enough money to invest – and that you can afford to lose it. While no one wants that worst-case scenario to occur, you’ve got to be aware of the risks involved, and you should never invest more than you can afford to lose.

You should also consider why you want to invest. You may want to generate funds for your retirement, increase your savings, or just raise cash for a fun purchase. The eventual goal for your investment should influence how much risk you’re willing to accept.

New investors should think about the timeframe they want to work with, too. If you need a short-term gain, investing may not be the best option, but people prepared to take a longer view will likely have a better chance of success.

Investment basics

There are three common categories of investments that you should consider as a beginner. Shares are tiny bits of a business – you buy them in the hope that the company will perform well and increase its value, therefore increasing the value of your piece of the pie, but weak performance will reduce its worth. Certain stocks also allow you to earn an annual dividend, where companies share profits with stockholders.

A bond is a method of investment where you loan money to a government or corporation with the expectation that they’ll invest it sensibly and deliver you a return.

The final common investment option, a fund, is increasingly popular. It’s a system where you invest in a collection of shares and bonds that experts have chosen. They’re usually organized by theme – like tech companies or businesses based in a certain country – and they take lots of hassle out of investment.

For beginners, most of these options are accessible in the UK through an ISA. This is a bank account where you can place money for investment – and it’s tax-free, so you can keep all of the money you generate.

Certain banks and organizations allow you to open a basic ISA while they choose and manage the investments. Lots of other platforms enable users to open ISAs and then choose the stocks, bonds and funds that the money is invested in.

Different investment options all carry various levels of risk. Bonds tend to be low risk, while shares carry a huge variety – some companies will naturally be more volatile than others. Funds are also built around distinct levels of risk, with some designed to be safer bets alongside others with more liability. As ever, higher risk usually equals greater rewards.

You should follow some rock-solid rules if you want to start investing. Don’t invest more than you can afford to lose, and try to diversify your investments – so you won’t lose everything if one investment goes badly. Keep an eye on your investments regularly, and don’t panic – just because something has lost value it doesn’t mean it’ll never recover.

How to start investing

You don’t need to head to the stock exchange or deal with complex computer screens to start investing your money – you just need to grab your smartphone.

The easiest way for a beginner to start investing is by using a third-party platform. There are loads of stock trading apps (opens in new tab) about, and big names like Nutmeg, Fidelity, E*Trade and Evestor tend to offer thousands of funds.

Many beginner investment platforms specialize in ready-built funds that take lots of the hassle out of choosing where to invest your money. You’re often able to choose funds based on themes, industries or risk levels, and “robo-adviser” platforms make things even easier by picking funds for you based on how much risk you’d like to take on. Sites like Personal Capital and Plum are among the most straightforward options. Many apps like this also allow you to buy shares in individual companies if that’s what you’d prefer.

You need to do your research to find a platform with the right level of simplicity and risk for you. Beginners would do well to pick a platform with a straightforward smartphone app and website that makes it easy to pick common, mainstream investments and monitor their progress without an overwhelming amount of information.

Also bear in mind that platforms need to make money, so you may be charged a fee to use your platform or you might have to pay fees based on how much money you make or fees based around transactions. Depending on your country and the type of investment you may also have to pay tax on your earnings.

Taking things further

If you’ve investigated platforms, invested in some funds and got some financial return by relying on robo-advisers then you may wish to take things further.

You could switch to a more complex platform that allows you to fine-tune which shares and funds you use – with this method you can create your own portfolio. You could generate more cash using this method, especially if you’ve got more experience with investments, but this could also lead to higher risk. It can be more time-consuming, too.

You may also choose to invest in a more unusual kind of asset. Lots of people invest money in property, like landlords who buy houses to rent out, and some people even invest in art or cars.

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