How to start investing
Collective funds can be a good option, pooling your capital with other investors to create a diversified portfolio of companies. Investment trusts are a type of collective fund that has endured for over 150 years.
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
How to choose an investment platform
An investment platform is often the starting point for stock market investments. These allow you to trade individual stocks and shares or buy and sell collective funds at the touch of a button. You can see the value of your holdings at any time. However, there are a lot of platforms to choose from – here are the factors you need to consider.
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It is important that you look at how and where you are going to be investing and pick a platform that’s right for your profile. For example, if you are predominantly a long-term investor saving into collective funds, you probably don’t need sophisticated trading functionality or low cost deals.
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Some platforms charge a percentage fee for the assets held, while some will use a set annual management fee. The latter tends to work better for those with larger sums on the platform. Either way, it is worth looking at the charging structure and ensuring that it suits your investment profile.
Should you invest in an ISA or SIPP?
Where possible it makes sense to shelter your investments in a tax-advantaged wrapper such as a Stocks & Shares ISA or a Self-invested Personal Pension (SIPP). By investing through an ISA or SIPP, your savings roll up tax-free, and there may be tax advantages when you take an income as well.
Everyone over 18 has a £20,000 annual savings limit on an ISA. All gains within an ISA are free from capital gains tax, and any income from dividends or interest paid within ISA investments is tax free.
SIPPs are a type of personal pension. You can contribute up to 100% of earnings, or a maximum of £60,000 per tax year across all your pensions and the government will add tax credits on top, depending on your top rate of tax.1
Lump sum or drip feed investment?
Once you have decided where to invest, you will need to decide whether to invest via a single lump sum, or drip-feed money into the market.
Lump sum investment
Regular investing
Portfolio construction tips
Ensuring your portfolio is properly diversified is important. A portfolio with a range of sectors and regions should be more resilient to weakness in individual areas. This is an important tool in managing stock market volatility over time.
Choose collective funds
Collective investments such as investment trusts already do some of the work for you on creating a diversified investment portfolio. They will invest in a carefully curated selection of companies and aim to manage risk by careful company analysis.
Understand your exposure
It is important to look at the underlying exposures in your portfolio. Most platforms have tools to help you do this. For example, the MSCI World index may seem diversified, but it has over 70% in the US and over a quarter of its capitalisation in the technology sector.2
Professional management
Investment Trusts are managed by experienced fund managers, carefully selected by the board, who make decisions on behalf of shareholders. Diversification is a key part of this active management approach.
Portfolio monitoring
Keeping track of your investments over time helps ensure your portfolio stays aligned with your financial goals. Investment platforms allow you to see your portfolio at the touch of a button and will often have portfolio analysis tools that enable a more granular examination of your portfolio.
Portfolio balance
Your portfolio may need to be rebalanced from time to time. If an area has done particularly well, it may become too large a share of your portfolio, introducing unexpected risks. Rebalancing can help bring that back in line. However, this shouldn’t tip over into excessive trading, which can cost money and may not improve performance.
Understanding investment risk
It is tempting to see risk through the prism of short-term falls in the value of your investments. In reality, long-term investors can ride out periods of volatility in markets. Nevertheless, there are a range of other risks that investors need to assess.
Inflation risk
Any long-term investment needs to keep pace with the rising cost of living. In recent years, cash savings products have had interest rates lower than inflation, which has left savers losing money in real terms. Stock market investment has done a better job outpacing inflation over the past decade.2
Capital loss
You can lose capital if you sell out of an investment at a loss, or if a company goes bankrupt. Market volatility can become permanent loss if an investor panics and sells out of their investments when the market is going through a tough patch.
Decide on investment goals
It is important to decide on your investment goals before you start investing. Do you want to generate long-term capital gains? A supplementary income? With a clear sense of what you want to achieve over the long-term, you can put any setbacks into context.
Advice and guidance for investors
If you are uncertain about investments and would like to take advice, there are a number of options available.
Financial advisers
A financial adviser can provide independent financial advice, tailored to your specific situation. This can cover investments, tax advice and a long-term financial plan.
Stockbrokers
Stockbrokers offer a range of service levels, including 'execution-only' for self-directed investors or an ‘advisory’ service, for those who want investment ideas.
Multi-asset funds
Multi-asset funds bring together a range of collective investments to create a one-stop portfolio option for investors. These are bought and sold like a conventional collective fund.
Our range
Source:
1Gov.uk - Pension schemes rates - 5 April 2025
2MSCI - MSCI World - 30 November 2025
Risk Warnings
Investors should refer to the prospectus or offering documentation for the funds full list of risks.
Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.
