Getting started: your first investment

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Why start investing now?

If your money is sitting in a savings account, it's likely losing value. With UK inflation still above the Bank of England's 2% target, cash savings often earn less in interest than prices rise each year. Investing gives your money the chance to grow at a rate that outpaces inflation over the long term.

You don't need to be wealthy to begin. Thanks to commission-free platforms like Abervest, you can start with as little as you're comfortable with and build up over time. The key is to begin early, stay consistent, and let compounding do the heavy lifting.

Step 1: Choose the right account

Before you buy your first investment, decide which type of account suits your goals. The most popular options are:

• Stocks & Shares ISA — Invest up to £20,000 per tax year and pay no UK tax on gains or income. A great starting point for most people.
• SIPP (Self-Invested Personal Pension) — Save for retirement with tax relief on contributions. Ideal if you're thinking long-term and don't need access until age 55 (rising to 57).
• General Investment Account — No contribution limits, full flexibility. Useful once you've used your annual ISA allowance.

If you're new to investing, a Stocks & Shares ISA is usually the best place to start. It combines tax efficiency with flexibility.

Step 2: Understand your risk tolerance

All investing involves risk — the value of your investments can go down as well as up. Before you commit any money, take a moment to think about:

• Your timeline. Are you investing for 5 years, 20 years, or retirement? Longer timelines can typically handle more risk because markets tend to recover from downturns over time.
• Your comfort with volatility. Could you sleep at night if your portfolio dropped 20% in a month? If not, a more conservative mix might suit you better.
• Your financial safety net. Make sure you have an emergency fund (typically 3–6 months of expenses) in cash before you invest. Money you might need soon shouldn't be in the markets.

Step 3: Pick your first investment

Many beginners start with a diversified ETF (exchange-traded fund) rather than picking individual stocks. A broad market ETF — like one tracking the S&P 500 or a global index — instantly spreads your money across hundreds or thousands of companies.

For example, instead of trying to predict whether Apple or Amazon will outperform, a global ETF lets you own a small slice of both — along with hundreds of other companies around the world. It's a straightforward way to get broad exposure in a single trade.

If you do want to pick individual stocks, start with companies you understand. Look at what they do, whether they're profitable, and whether you believe in their long-term prospects. Resist the urge to chase hype.

Step 4: Make it regular

One of the most powerful habits in investing is consistency. Setting up a monthly direct debit — even for a modest amount — helps you build wealth steadily without needing to time the market.

This approach, known as pound-cost averaging, means you buy more shares when prices are low and fewer when they're high. Over time, this smooths out the ups and downs and removes the pressure of trying to find the "perfect" moment to invest.

Step 5: Stay the course

Markets move up and down — that's normal. The most successful investors tend to be those who stay invested through the noise rather than panic-selling during downturns. Check your portfolio periodically, but avoid the temptation to trade constantly based on short-term news.

Remember: you're investing for the long term. A well-diversified portfolio, regular contributions, and patience are the ingredients that have historically rewarded investors most reliably.

Risk disclaimer: When you invest, your capital is at risk. The value of investments can go down as well as up, and you may get back less than you invest. This article is for informational purposes only and does not constitute financial advice. Tax treatment depends on individual circumstances and may change in the future.