Oliver Morley
Chief Executive Officer
Learn the basics of investing, alongside the risks, potential rewards and practical steps to help build long-term financial confidence and resilience.
According to Anna Sharkey, Head of Money and Pensions Policy, Money and Pensions Service, “Investments are something you buy or put your money into to hopefully get a profitable return in the long-term.”
Types of investments
Some examples include shares — where you buy a stake in a company, cash – which includes the savings you put in the bank, and property — where you invest in a physical building. ISAs are another type of investment, with cash ISAs offering tax-free interest on savings, and stocks and shares ISAs offering tax-free growth on long-term savings.
The contributions made by you and your employer to your pension are also an investment, as the idea is that this money grows over time.
The various investments, or ‘assets’ you own, are called your portfolio. Typically, spreading your money between different types of assets helps to lower the risk of your investments going down.
The benefits of investing are that they offer the potential for higher long-term returns compared to cash savings, and some forms of investing, like ISAs, also offer tax benefits
Benefits of investing
The benefits of investing are that they offer the potential for higher long-term returns compared to cash savings, and some forms of investing, like ISAs, also offer tax benefits. However, there is no such thing as a no-risk investment, and the higher the risk you take, the more you could either get back or lose.
The biggest risk with investing is that you could lose some or all of your money. The market is ever-changing, and no one can fully predict what will happen day-to-day that could impact your money.
These changes include market volatility, interest rate changes, poor company performance or unexpected global events.
Before you invest money, make sure you still have enough in an instant-access savings account to cover you for unexpected costs, as you can’t fully rely on the money you put into investments to give you the same or higher return as what you put in.
For more direct support with investing, you might consider working with a financial adviser. They can give advice that’s tailored to you and your financial situation.
Visit MoneyHelper.org.uk for more information on investing, including our guide on choosing a financial adviser.
