Beginner's Guide
Get on the right path to investing
You don't have to be rich or a rocket scientist to become an investor. If you’re thinking about investing, there are really two main things you need to understand:
- You’ll need to hang on to your investments for at least five years or longer
- Even if you do, there’s a chance you might get back less than you put in.
To find out more about the basics of investing explore our six step guide.
Smart Investor doesn't offer personal advice, so if you're unsure about investing, please speak to a financial adviser. Smart Investor is an investment service for UK residents. Our service is not available to US persons, even where resident in the UK.
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Deciding which option is right for you
The choice between holding cash in a savings account and investing could have a big impact on your future. When you invest, you hope for greater returns than you can get from a savings account but you also have to accept that you could get back less than you put in.
Start by taking a close look at your finances and your commitments to work out where you are now, and where you want to get to.
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Are you ready to invest?
Before you start investing it’s important to consider if:
You’ve paid off any debts like credit cards or loans
You have sufficient savings you can access in emergenciesNow you can start to think about how much you can afford to put away – and whether you’re comfortable with the risks.
Give your money time to grow
The sooner you’re able to start investing, the longer your money has a chance to grow.
You don’t need a big lump sum to get started, putting money away regularly can make a big difference in the long-term.
If you’re not sure whether to save or invest, learn more about the differences between the two.
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Move on to step two below
Or if you're ready
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A little bit of planning
Knowing what you're investing for, and when you're likely to need the money is really important.
Perhaps you're investing to cover the education costs for your children; planning ahead for home improvements in the future, or so that you can enjoy a comfortable retirement.
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Short-term
For short-term goals, say less than five years, opting for a savings account or a cash Individual Savings Account (ISA), offers the security that you’ll get the same amount back.
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Long-term
For long-term goals, you should consider how much you’d like to build your savings in the period, balanced with the level of risk you’re comfortable with.
Move on to step three below
Or if you're ready
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Balancing risk and reward
All investments involve the risk of loss – which sounds scary but the whole point of investing is the belief that by taking some risk you have the potential to achieve a better return than simply leaving your money in a savings account.
Often the greater the potential rewards, the bigger the risk of loss involved. The key is to work out where you feel comfortable between risk and reward. If you’re investing for around five years, you might decide you want to be more cautious. But if you want to leave your money invested for much longer, you might prefer to take more risk.
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Length of time
You should invest for at least five years, but ideally longer. The more time you’re invested the better chance you have to make money when you sell your investments.
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Diversification
If you invest in a good mix of companies and asset types you’re spreading the risk. If you choose a range of funds, the risk can also be spread for you and managed by experts.
Move on to step four below
Or if you're ready
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Which account is right for you?
Before you can start choosing investments you need to decide what type of account would suit you best. We offer two accounts suitable for beginners.
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Investment ISA
Also known as a stocks and shares ISA, it’s a tax-efficient account where you can buy, hold and sell a wide range of investments. You can invest up to £20,000 this tax year – although you don’t have to use the full amount. Subject to terms, conditions and ISA conditions being met, your returns are free from Capital Gains Tax (CGT), tax on dividends and income tax.
Investment Account
If you’ve used up your ISA allowance and have more to invest, or you simply don’t want any limits placed on how much you can invest each tax year, then an Investment Account is an option for you.
Of course tax rules, allowances and other reliefs from tax may change and the benefits depend on your own circumstances, which could change over time.
Our fees
No charge to open the account and a simple annual customer account fee of 0.25% on investments up to £200,000 and 0.05% on investments above £200,000.
Activity Cost Buying and selling shares* £6 per deal** Buying and selling funds No charge Regular investments No charge Dividend reinvestment No charge Holding cash No charge Transferring investments No charge Cash withdrawal and account closure No charge *Including ETFs, investment trusts, bonds and gilts
**Online dealing only. Taxes may apply when buying shares. A foreign exchange and an international brokerage fee will be charged when trading international shares.
Retirement
If your goal is saving for retirement you should be thinking about the best pension for you. You might already have a workplace pension or you may be looking for another option. Pensions are complex so you might need to take advice. Find out more about pensions.
Move on to step five below
Or if you're ready
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Your investment options
Your aim should be to invest your money across a broad range of asset types and Smart Investor offer thousands of options. You can choose from funds, shares in UK and 10 international markets, gilts and bonds, Exchange Traded Funds (ETFs) and Investment Trusts. Find out more about our investment options.
However, if you’re new to investing this can make deciding where to invest tricky. So we have a few options to help make it a bit easier.
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A Ready-made solution
If you want a quick and simple way to build a diversified portfolio you can choose from five funds managed by our investment experts.
These are our Ready-made Investments. Each fund has a risk rating and a chart showing investment categories to help guide you.
Once you’ve chosen the right fund for you, leave it to our experts to monitor and manage.
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Barclays Funds List
If you’d like to choose your own investments from a wider range of funds, the Barclays Funds List helps you narrow down the many options available.
Our experts have selected a range of funds from each of the investment sectors we believe are key for building a diversified portfolio. As well as including funds from different sectors, our list includes different types of funds – active, trackers, and our own Barclays Multi-Manager funds. We continue to monitor the list and make adjustments to the selection as and when we believe it's required.
Remember the value of investments can go down as well as up and you could get back less than you put in.
Move on to step six below
Or if you're ready
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Keep your investments on track
Once you’ve chosen your investments it can be tempting to keep checking on their progress. Seeing markets fall can be scary, but try not to make any panic decisions. Remember you’re invested for the long-term so don’t be put off by every market movement.
When stock markets are turbulent you should focus on the reasons you chose your investments and whether or not those reasons still hold true.
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Roughly every six months we suggest you check:
Your overall financial situation and make sure you’re happy with the amount you’re investing
Your goals and timeframes are still the same
The level of risk you want to take is the same
Your investments still meet the level of risk you’re comfortable taking – if you have a Ready-made Investment, our experts will make sure the fund is still aligned to the original risk profile.
Or if you're ready
