How to Start Investing in the UK: A Seven-Step Plan

Starting investing can feel much harder than it needs to be.

There is a wide choice of funds, investment platforms and plenty of opinions about what you should buy. For someone investing for the first time, this can be difficult, doing nothing feels a safer option.

But you don’t need a complicated portfolio to start investing. You just need to answer seven questions. This guide takes you through them.

Correct at 16 August 2026. This article is for education and information and isn’t personal financial advice. Investments can fall as well as rise and you may get back less than you invest.

1. Before you invest: will you need this money?

Start with a simple question: When might I need this money?

If it’s your house deposit for two years’ time, next year’s university fees or money you might need if you lose your job, investing it in the stock market probably isn’t sensible.

Share prices can fall sharply and many years of experience has told me, it doesn’t work to your timetable. You don’t want to find yourself needing to withdraw some money, just as your investment has fallen.

The FCA suggests thinking in terms of at least five years for stock-market investing, because a longer period gives investments more opportunity to recover after falls. Five years isn’t a magic number and it doesn’t guarantee a profit. But it is simply a useful starting point.

You should also consider expensive debts and building accessible emergency savings before investing. For many households, keeping around three to six months of essential expenditure in readily accessible savings can provide that emergency reserve.

Money you may need soon belongs in cash. Money you can leave alone for years can be considered for investment.

2. Understand how much investment risk you can take

Being comfortable with risk and being able to afford risk are different things.

We have a separate article to help you consider your what return and risk to take with your investments. Our Investments Risk Assessment looks at these two areas separately.

Risk capacity asks what would happen to your finances if investments fell. It considers whether a loss would damage your financial plans.

Investor composure asks how you are likely to react when markets fall.

Suppose you invest £20,000 and six months later it’s worth £16,000.

Could you leave it invested without changing your financial plans? And perhaps just as importantly, would you?

Someone may feel comfortable taking investment risk but have little financial capacity to absorb a loss. Another investor may have plenty of financial capacity but know that a 20% market fall would make them sell everything.

We recommend you look at these two measures because being willing to take risk and affording to take a risk are different. Our assessment also considers your investment knowledge and experience.

To assess your own risk use the Clearly Investments Risk Assessment calculator.

Be realistic when making an investment, your investment should fit your circumstances rather than chasing a return. This sounds simple, anyone who has faced a loss in their investments will tell you how important it is.

3. Choose the right account: ISA, pension or taxable account

Next, separate two decisions that new investors often mix together.

The account holds your investment. The fund is the investment.

You might therefore hold exactly the same investment fund inside an ISA, pension or taxable investment account, but the tax treatment and access to your money can be very different.

The ISA allowance remains £20,000 in 2026/27.

For pensions, the standard annual allowance is £60,000 in 2026/27, although the amount can be lower in some circumstances. Tax relief on personal contributions is also subject to earnings rules. Most people can’t normally access pension benefits before 55, with the normal minimum pension age scheduled to rise to 57 from 6 April 2028.

If you’re employed, don’t overlook your workplace pension, particularly if your employer will contribute more when you contribute more.

A General Investment Account doesn’t provide the same tax shelter. Capital gains can become taxable, with the individual Capital Gains Tax annual exempt amount currently £3,000 for 2026/27.

For a new investor, when you need access to the money should play a large part in this decision.

4. Decide how you’re going to invest

You could buy individual shares, several investment funds, bonds, investment trusts and ETFs.

But you don’t need to make your first investment complicated. For someone making their first investment, we favour starting with one diversified multi-asset fund that matches the level of risk you have decided they can take.

A diversified fund might own hundreds of different investments across many countries. A multi-asset fund can include shares, government and corporate bonds and, depending on the fund, other assets.

These funds can spread money across these investments, reducing reliance on the success or failure of any single company or asset.

Different versions of the fund can then match your levels of risk.

A more cautious fund might hold a larger proportion in bonds and a smaller proportion in shares. A higher-risk version might invest most of the portfolio in global equities.

Many multi-asset funds also rebalance automatically. If shares rise strongly and become too large a proportion of the portfolio, the fund adjusts its holdings towards its intended mix.

For a first-time investor, that’s attractive. One investment can provide the asset allocation, diversification and ongoing rebalancing.

It also removes the temptation to keep changing funds simply because something new hasn’t performed well recently.

5. Choose a simple investment solution

For first time investors, we are recommending a simple approach. The next job is choosing the particular fund.

Don’t start by finding the fund with the best return over the last year. Yesterday’s winner isn’t necessarily tomorrow’s.

Start with what the fund owns.

1. How much is invested in shares? This will usually be the main driver of how much the fund rises and falls.
2. Where does it invest? Look for broad exposure rather than dependence on one country, sector or small group of companies.
3. What does it cost? Look at the fund’s ongoing charge and any other material costs. Fees come directly out of your investment return; the FCA advises investors to compare them.
4. How is it managed? Some funds mainly track markets using index funds; others employ managers to make active investment decisions.
5. Does the asset mix actually fit you? A cheap fund isn’t a good choice if its risk is far higher than you’re comfortable taking.

Read the fund factsheet rather than relying on its name.

Words such as balanced, cautious or growth can mean different things at different fund companies. Look at the percentage invested in shares and bonds.

And remember an easy distinction: a global equity index fund can be very diversified across companies, but it is still a 100% share portfolio.

For someone wanting a mixture of shares and bonds, a multi-asset fund may therefore be the simpler starting point.

6. Decide if you want to invest it all at once

Suppose you have some money ready to invest. Do you invest the whole amount today or invest across a period of time.

Investing the lump sum gets all your money into the market immediately. If you’re investing for many years and you can probably tolerate any short-term falls.

Drip-feeding means investing gradually. That can make starting psychologically easier because you don’t face the possibility of committing everything the day before a market fall.

My advice is if you feel you will say invested, if the market falls, then invest the money on day one. Over the longer term the market has risen and there is a higher probability that the market will raise rather than fall.

If you feel concerned about the market, and would worry if you saw the value of your investment below the amount you invested, then create a plan to add the money in. If you do create a plan, add dates to the plan, just waiting for the market to fall, can leave you waiting for a long time. I have learned this point from bitter experience.

8. Choose the platform that will hold your investment

Once we have decided what you are doing, you can think about the investment platform or how you are going to hold your investments.

To help you select an investment platform, we have written a guide to choosing an Investment Platform.

We have added this in as the final step as you can now select a platform based on what you are looking to do. If you do look at different providers these are the type of things you should look for:-

• Platform charges. Work out what they mean in pounds for the amount you intend to invest.
• Fund availability. Check your chosen fund is actually offered.
• Regular investing. If you’re investing monthly, look at the charges and minimum contribution.
• Administration and service. A low fee isn’t much consolation if transferring money or dealing with a problem becomes difficult.
• Transfer and dealing charges. Check what you’ll pay when buying, selling or eventually moving elsewhere.
• Regulation. Check the provider using the FCA Firm Checker or Financial Services Register before sending money.

Costs matter, but don’t choose on cost alone. You want a platform you understand, that offers the account and investments you need, at a sensible price.

An example

Imagine Sarah has £15,000 that she wants to invest for at least ten years.

She has no expensive short-term debt and keeps separate emergency savings.

She completes the Clearly Investments Risk Assessment and decides that a middle level of investment risk fits both her finances and how she feels about market falls.

Sarah then decides:

Account: Stocks & Shares ISA
Approach: One diversified multi-asset fund
Fund: A broadly diversified fund with a mixture of global shares and bonds matching her chosen risk level
Funding: She decides to invest the £15,000 immediately or as this is long term money.
Platform: She compares platforms that offer the ISA and chosen fund, looking at the total annual cost in pounds

That’s a complete investment portfolio.

She doesn’t need multiple funds, and a collection of individual shares to become an investor. Starting simple.

You may earn more, use your ISA allowance, build a larger pension or simply become more interested in managing investments yourself. At that stage, there may be reasons to consider a more detailed portfolio.

Your next step

Before choosing an investment, complete the Clearly Investments Risk Assessment. It takes around three minutes and looks separately at your financial capacity for loss, investor composure and investment experience.

Next in the New Investor pathway:
Cash or Investments? Match Your Money to Its Timescale
Stocks & Shares ISA, SIPP or General Investment Account?
Your First Fund: Global Index Fund or Multi-Asset Fund?
Selecting the Right Investment Platform

Sources and review date

Tax figures and pension rules checked against GOV.UK for the 2026/27 tax year. Investment timescale, diversification, costs and platform checks cross-checked against FCA and MoneyHelper guidance.

Last reviewed: 16 August 2026