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10 of the best investment tips for beginners

Investing can be rewarding in the long run, but it can also be daunting if you’ve never tried it before. 

For example, what do you need to consider before you invest in any assets, and do you need a lot of money to get started? 

We reveal some of the best investment tips for beginners below.

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1. Do your research 

Consider how much you’re comfortable investing (and whether you have a sufficient emergency fund), the goal of your investments, how long you want to invest and your risk appetite.  

It’s a good idea to have a plan about where you want to invest and for how long, as well as identifying long-term trends, potential headwinds and macroeconomic factors.  

There are a lot of ways you can invest.

For example, you could invest in shares, opt for a fund, investment trust, bonds, property, or even choose an exchange-traded fund (ETF).

Alternatively, an investment platform can offer a plan based on your attitude to risk. 

And don’t forget that your investments can rise and fall in value, and you should focus on time in the market, not timing the market! 

2. Review your pensions

Before investing, it’s a good idea to look at how your pensions are performing.

The earlier you start contributing to your pension, the longer it has to grow in value. 

It’s wise to check if you’re saving enough for retirement and whether you should boost your contributions – your employer may pay in more each month if you increase these.   

You could look at your pension funds to see whether they are performing well and if the fees are too high, as well as whether pension consolidation is worth considering. 

Pensions are complicated, and there are many pros and cons with pension consolidation, so it’s worth doing your research and getting financial advice if you need guidance.

3. Choose how much you want to invest 

Investing is often associated with the wealthy, but you can start investing with only small amounts of money regularly instead of a lump sum. 

Drip-feeding money into your investments can also make you less vulnerable to market volatility, plus you may be able to buy more shares when they are cheap. 

4. Start investing as soon as you can 

If you’re comfortable with your finances and looking for better returns on your money compared to a savings account, consider investing sooner rather than later. 

By investing now instead of in five years’ time, you have more time for your money to grow (and the chance to ride out market volatility), and you can benefit from compound interest. 

5. Diversification is key 

Investing comes with an element of risk, so you shouldn’t put your eggs in one basket and only invest in a few companies in the same sector. 

If those companies or the sector they operate in face major headwinds, you could lose money.  

One way to mitigate risk is to diversify your investment portfolio by spreading your money over various regions and investment types. 

6. Open an ISA 

If you open a Stocks and Shares ISA, you can pay up to £20,000 a year and not pay tax on income or capital gains from investments.  

You’ll need to use your annual allowance by the end of each tax year (5 April), or you’ll lose it. 

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7. Don’t panic sell! 

Investing should always be part of a long-term strategy.

Before you get started, you should make sure that you won’t need to access the money you plan to invest. 

If your investments are struggling, consider your next move carefully.  

When you sell an investment after it falls in value, you’ll crystallise your losses, so think about the long-term view and whether a recovery is likely.

If your investments can bounce back, you can prevent crystallising any losses and potentially benefit from a recovery. 

8. Consider reinvesting dividends 

Reinvesting dividends, which can be done automatically, is an easy way to increase your holdings over time, potentially helping to boost your returns.  

It’s worth thinking about whether you need your income now and if you want to put more money into existing investments.  

9. Watch out for fees and tax 

If you use an investment platform, you may have to pay a fee to buy and sell investments, and another to hold investments in your account with them. 

You may be subject to foreign exchange charges if you buy shares outside the UK market or if a foreign investment you hold pays a dividend, as well as fund charges and stamp duty reserve tax. 

It’s also worth looking out for hidden charges, such as for subscriptions or paperwork. 

While a Stocks and Shares ISA is useful when investing, you also get tax allowances.

For example, you pay capital gains tax– a tax on the profit when you sell an asset that’s risen in value – if this exceeds your annual allowance of £6,000 (£3,000 for trusts).  

Then there’s the dividend allowance, allowing you to earn £1,000 on dividend income before paying tax.

If your only income is from investments, you can also use your personal allowance.  

10. Review your investments  

It’s wise to review your investments regularly – how are they performing, and are you happy with your risk appetite?

Are you hoping to access your money soon, or do you need to rebalance your portfolio to reduce the risk? 

How can a financial adviser help?

If you’re struggling to meet your financial goals, an independent adviser can help.

They will look at your circumstances and future goals to help you achieve them.

Unbiased can connect you with an expert who can look at your circumstances and help craft the best investment strategy.

Get financial advice
We’ll find a professional perfectly matched to your needs. Getting started is easy, fast and free.

About the author
Lisa-Marie Voneshen is a Senior Content Writer at Unbiased. She is an award-winning journalist with nearly a decade of experience writing and editing content across various areas, including personal finance and investing.