Investing is widely regarded as a more effective way to grow wealth than relying solely on cash savings. By putting money into the stock market, you can own stakes in major global brands or discover undervalued opportunities. Historically, investment returns have outperformed cash savings over the long term and offer a better chance of beating inflation.
Planning is essential before diving in. Ross Lacey, director at Fairview Financial Planning, advises starting with clear goals: “Ask yourself what you’re actually investing for. Start with the end in mind, such as needing £250,000 in your pension in ten years, and work backwards.” Goals can range from short-term purchases like a car or holiday to longer-term objectives such as a mortgage deposit or wedding fund.
You don’t need to be wealthy to begin. Many platforms allow you to start with as little as £1 or £100. Dan Coatsworth, investment analyst at AJ Bell, recommends setting up a direct debit to invest small amounts regularly: “Taking it slow and steady cushions you from market ups and downs and removes the worry of timing the market.”
Investors can choose between DIY investing, where you manage your own portfolio, or seeking professional help from a financial adviser or a robo-wealth manager. Each option comes with costs like annual management fees and fund charges. DIY investing suits those with time and knowledge, while advisers offer expertise in portfolio construction and tax efficiency.
Before investing, it is wise to pay off expensive debts, such as credit cards or high-interest personal loans, and build an emergency fund covering at least three months of expenses. Coatsworth emphasises: “Once that’s sorted, draw up a plan covering how much you can invest monthly, your risk appetite, goals, and when you’ll need access to the money.”
Anita Wright, chartered financial planner at Bolton James, warns that DIY investors often chase past performance, leading to buying high and selling low. Professional advisers help mitigate these risks and offer valuable guidance during life events like retirement, inheritance planning, or receiving a windfall. Scott Gallacher, chartered financial planner at Rowley Turton, notes that many people benefit from such advice, especially when the value extends beyond pure investment returns.
