Investing – beginner’s guide

If your savings goal is more than five years away, putting some of your cash into investments could allow you to earn more from your money and keep up with rising prices.

What are investments?

Protect yourself

Avoid unsolicited investment offers.

Before investing check the FCA register and warning list.

If you’re considering an investment offer, seek impartial advice.

Investments are something you buy or put your money into to get a profitable return.

Most people choose from four main types of investment, known as ‘asset classes’:

  • Shares - you buy a stake in a company
  • Cash – the savings you put in a bank or building society account
  • Property – you invest in a physical building, whether commercial or residential
  • Fixed interest securities (also called bonds) - you loan your money to a company or government

There are other types of investments available too, including:

  • Foreign currency
  • Collectibles, such as art and antiques
  • Commodities like oil, coffee, corn, rubber or gold
  • Contracts for difference, where you bet on shares gaining or losing value

The various assets owned by an investor are called a portfolio.

As a general rule, spreading your money between the different types of asset classes helps lower the risk of your overall portfolio under performing.

Returns

With an instant access cash account you can withdraw money whenever you like and it’s generally considered a secure investment. The same money put into fixed interest securities, shares or property is likely to go up and down in value but should grow more over the longer term, although each is likely to grow by different amounts.

Returns are the profit you earn from your investments.

Depending on where you put your money it could be paid in a number of different ways:

  • Dividends (from shares)
  • Rent (from properties)
  • Interest (from cash deposits and fixed interest securities).
  • The difference between the price you pay and the price you sell for – capital gains or losses.

How fees reduce investment returns

Managing investments takes time and money and service providers will charge a fee.

This cost can eat into the returns you’ll receive and it’s something you should ask about before you invest.

Our popular investments guide indicates the sorts of fees to look out for, or you can get an overview for all investments by following the link below.

Read our guide on Understanding investment fees

Risks

None of us likes to gamble with our savings but the truth is there’s no such thing as a ‘no-risk’ investment.

You’re always taking on some risk when you invest, but the amount varies between different types of investment.

Money you place in secure deposits such as savings accounts risks losing value in real terms (buying power) over time.

This is because the interest rate paid won’t always keep up with rising prices (inflation).

On the other hand, index-linked investments that follow the rate of inflation don’t always follow market interest rates.

This means that if inflation falls you could earn less in interest than you expected.

Stock market investments might beat inflation and interest rates over time, but you run the risk that prices might be low at the time you need to sell.

This could result in a poor return or, if prices are lower than when you bought, losing money.

When you start investing, it’s usually a good idea to spread your risk by putting your money into a number of different products and asset classes.

That way, if one investment doesn’t work out as you hope, you’ve still got your others to fall back on.

This is called ‘diversifying’. Find out more in our guide below.

When should you start investing?

If you’ve got plenty of money in your cash savings account – enough to cover you for at least six months – and you want to see your money grow over the long term, then you should consider investing some of it.

The right savings or investments for you’ll depend on how happy you’re taking risks and on your current finances and future goals.

Follow the links below to get the answers.

This article is provided by the Money Advice Service.

Share this page

What do you want to do?
What is your question about?
Do you want a reply?
Your email address
To reply to you, we need your email address
Your feedback

We will not reply to your feedback.  Don't include any personal or financial information, for example National Insurance, credit card numbers, or phone numbers.

This feedback form is for issues with the nidirect website only.

You can use it to report a problem or suggest an improvement to a webpage.

If you have a question about a government service or policy, you should contact the relevant government organisation directly as we don’t have access to information about you held by government departments.

You must be aged 13 years or older - if you’re younger, ask someone with parental responsibility to send the feedback for you.

The nidirect privacy notice applies to any information you send on this feedback form.

Don't include any personal or financial information, for example National Insurance, credit card numbers, or phone numbers.

Plain text only, 750 characters maximum.
Plain text only, 750 characters maximum.

What to do next

Comments or queries about angling can be emailed to anglingcorrespondence@daera-ni.gov.uk 

What to do next

If you have a comment or query about benefits, you will need to contact the government department or agency which handles that benefit.  Contacts for common benefits are listed below.

Carer's Allowance

Call 0800 587 0912
Email 
dcs.incomingpostteamdhc2@nissa.gsi.gov.uk

Discretionary support / Short-term benefit advance

Call 0800 587 2750 
Email 
customerservice.unit@communities-ni.gov.uk

Disability Living Allowance

Call 0800 587 0912 
Email dcs.incomingpostteamdhc2@nissa.gsi.gov.uk

Employment and Support Allowance

Call 0800 587 1377

Jobseeker’s Allowance

Contact your local Jobs & Benefits office

Personal Independence Payment

Call 0800 587 0932

If your query is about another benefit, select ‘Other’ from the drop-down menu above.

What to do next

Comments or queries about the Blue Badge scheme can be emailed to bluebadges@infrastructure-ni.gov.uk or you can also call 0300 200 7818.

What to do next

For queries or advice about careers, contact the Careers Service.

What to do next

For queries or advice about Child Maintenance, contact the Child Maintenance Service.

What to do next

For queries or advice about claiming compensation due to a road problem, contact DFI Roads claim unit.

What to do next

For queries or advice about criminal record checks, email ani@accessni.gov.uk

What to do next

Application and payment queries can be emailed to ema_ni@slc.co.uk

What to do next

For queries or advice about employment rights, contact the Labour Relations Agency.

What to do next

For queries or advice about birth, death, marriage and civil partnership certificates and research, contact the General Register Office Northern Ireland (GRONI) by email gro_nisra@finance-ni.gov.uk

What to do next

For queries about:

If your query is about another topic, select ‘Other’ from the drop-down menu above.

What to do next

For queries or advice about passports, contact HM Passport Office.

What to do next

For queries or advice about Penalty Charge Notices (PCNs), including parking tickets and bus lane PCNs, email dcu@infrastructure-ni.gov.uk

What to do next

For queries or advice about pensions, contact the Northern Ireland Pension Centre.

What to do next

If you wish to report a problem with a road or street you can do so online in this section.

If you wish to check on a problem or fault you have already reported, contact DfI Roads.

What to do next

For queries or advice about historical, social or cultural records relating to Northern Ireland, use the Public Record Office of Northern Ireland (PRONI) enquiry service.

What to do next

For queries or advice about rates, email LPSCustomerTeam@lpsni.gov.uk

What to do next

For queries or advice about  60+ and Senior Citizen SmartPasses (which can be used to get concessionary travel on public transport), contact Smartpass - Translink.