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Investing for beginners – choosing your first investment

Thinking of making your first investment? Here are some tips and ideas to help you get started.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Choosing investments is one of three important steps to think about when becoming an investor.

Once you’ve decided on an investment platform and you’ve chosen an account, you might want to think about where to invest your money. This article provides some tips but you’ll still need to do your own research and decide what’s right for you, your needs and attitude to risk.

It’s also important to remember that investing isn’t for everybody. Saving tends to be for the short term, while investing is for the longer term – we suggest at least 5 years.

Read more about the differences between saving and investing or watch our video to get to grips with the basics.

Investments fall as well as rise in value, so you could get back less than you put in. This article isn’t personal advice. If you’re not sure if an investment is right for you, you should seek advice.

How will you make your investment?

Before you choose your investments, it’s worth thinking about whether you want to invest regularly, or if you’d prefer to make a one-off instruction.

It’s notoriously hard to judge the best time to invest, so drip-feeding your money into your chosen investments could be a sensible option.

Investing with a monthly Direct Debit is one way to do this. You can set one up to invest automatically, from £25 per investment. But while this could take the emotion out of your decisions, you’ll need to check the charges and whether it’s an option for the investments you’ve chosen.

Find out more about investing by Direct Debit

What type of investment will you choose?

There’s plenty of choice when it comes to investing. For lots of beginners this can be overwhelming.

To try and narrow down your options, you can learn about the different types of investment available. For example, two of the main ways to invest are in shares and funds.

  • Shares – you’re buying a part of a company, in exchange for a share in how it performs. They trade live on a stock exchange, where different companies are bought and sold.
  • Funds – individual investors give their money to a fund manager – who invests all the money, choosing investments on everyone’s behalf based on the fund’s objectives. They aim to grow the money over time, produce an income, or a combination of both. You’ll pay a fee to own a ‘unit’ in a fund, in exchange for the manager’s expertise and time spent looking after your money.

For beginners, funds offer more diversification than shares. We have a number of tools to help investors make their own decisions like the Wealth Shortlist, as well as offering a range of ready-made portfolios. Our research team have highlighted the following two funds as investment ideas for new investors.

Investment ideas

Let the professionals do the hard stuff for you and opt for instant diversification with a fund that includes both different asset classes and exposure to different geographies too.

Mixed investment funds can be a good one-stop-shop for new or novice investors, or investors looking to outsource asset allocation. They usually blend shares and bonds, but the proportions are different for every fund.

Overall, they use a range of strategies, so some are more cautious or adventurous than others. Investors should look for the fund that matches their risk profile.

Investing in these funds isn’t right for everyone. Investors should only invest if the fund’s objectives are aligned with their own, and there’s a specific need for the type of investment being made.

Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.

Baillie Gifford Managed

This fund invests across six major investment areas: shares in the UK, the US, Europe, Asia and the emerging markets, and bonds. It provides a huge amount of diversification in one fund. Shares tend to make up more of the fund than others in the same sector, so we consider it a more adventurous option than many of its peers. It could boost the growth of a more defensive portfolio with a focus on bonds, or add a little stability to a portfolio focused on shares. The fund can invest in derivatives and emerging markets, which can increase risk.

Please note this fund has a holding in Hargreaves Lansdown PLC.

More about this fund, including charges

Baillie Gifford Managed Key Investor Information

Pyrford Global Total Return

This fund is at the other end of the risk spectrum, for more cautious portfolios. This fund aims to deliver a return ahead of inflation over the long term. While it won't shoot the lights out, the managers try to grow investors' wealth modestly over the long run, without all the significant ups and downs of investing fully in the stock market. We think this makes it a great solution for a more conservative portfolio, or a way to bring some stability to a broader investment portfolio. They can invest in companies across the globe, with the flexibility to invest in emerging markets, which if used increases risk.

Please note this is an offshore fund so you are not normally entitled to compensation through the UK Financial Services Compensation Scheme.

More about this fund, including charges

Pyrford Global Total Return Key Investor Information

Useful resources

There’s always more you can learn as an investor. If you’d like to read more before deciding on your first investment, here are three pieces we think you could find helpful.

  • Don’t put all your eggs in one basket

    Learn more about diversification, and why it pays to be smartly spread.

    Read now

  • How not to invest

    Find out about five instincts you’ll want to act on, but shouldn’t.

    Read now

  • How to build an investment portfolio

    Creating a tailor-made portfolio can be a tricky art to master. We look at how to apply a popular strategy.

    Read now

What did you think of this article?

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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