The steps to take before you invest, ISAs and pensions, funds vs individual shares, costs, risk and diversification, protection and scams, with the ISA changes coming in April 2027.
Investing can help your money grow faster than inflation over the long term, but it comes with the risk of losing money, especially in the short term. Before you buy anything, it pays to get the foundations right. This checklist covers the order to do things in, the accounts to use and the mistakes to avoid. It is general information, not financial advice.
Before you invest: the foundations
- Clear expensive debt. Paying off a credit card charging 20% or more is a guaranteed "return" few investments match.
- Build an emergency fund in easy-access cash, typically three months of essential spending.
- Make the most of your workplace pension, especially any employer matching, before investing elsewhere.
- Invest only money you can leave for at least five years. Over shorter periods, markets can fall and not recover in time.
Choose the right account (the "wrapper")
Stocks and shares ISA
Gains and income inside an ISA are free of UK income tax and capital gains tax. The overall ISA allowance is £20,000 a year. From 6 April 2027, people under 65 will be able to put no more than £12,000 of that into a cash ISA, but the full £20,000 can still go into stocks and shares ISAs.
Lifetime ISA
If you are aged 18 to 39, you can open a Lifetime ISA and pay in up to £4,000 a year, with a 25% government bonus, for a first home or later life. Withdrawing for other reasons usually means a 25% charge, which means you can get back less than you paid in.
Pensions
Contributions get tax relief and employers often add money, but you cannot normally access pensions until 55 (57 from April 2028). Pensions suit long-term retirement saving.
General investment account
No tax wrapper. Use it only once ISA and pension allowances are used, and keep records for tax.
What to invest in?
- Funds pool your money with other investors and spread it across many companies. Index funds and exchange-traded funds track a market and usually have low charges.
- Individual shares concentrate risk in a few companies. Many beginners do better with diversified funds.
- Bonds are loans to governments or companies, usually less volatile than shares.
- Cryptoassets are high-risk and largely unregulated; the FCA warns you should be prepared to lose all the money you put in.
Diversification, spreading money across many investments, regions and asset types, reduces the impact of any one going wrong.
Costs matter
You may pay a platform fee, fund charges and dealing charges. Small percentage differences compound over decades. Compare total costs for the amount and style of investing you plan, as some platforms charge flat fees and others charge a percentage.
Your attitude to risk
Ask yourself how you would feel, and what you would do, if your investments fell by 20% or more in a year. If the answer is "sell in a panic", choose a more cautious mix. Investing regularly, monthly for example, smooths out the price you pay over time.
Protection and scams
- Use firms authorised by the FCA: check the FCA register.
- The FSCS can protect investments up to its limit if an authorised firm fails, but not against investments falling in value.
- Be wary of unexpected contact, guaranteed high returns or pressure to act fast. Check the FCA's warning list.
Step by step: getting started
- Tick off the foundations above.
- Decide your goal and timescale.
- Choose an account type, usually a stocks and shares ISA.
- Pick an FCA-authorised platform with suitable costs.
- Choose a diversified fund that matches your risk level.
- Set up a regular monthly payment and review once a year, not every day.
Frequently asked questions
How much do I need to start?
Many platforms let you invest from small regular amounts.
Should I get advice?
For larger sums or complex situations, a regulated financial adviser can help. MoneyHelper explains how to find one.
Sources and further reading
- GOV.UK: Individual Savings Accounts
- GOV.UK: Cash ISA limit reduction from April 2027
- GOV.UK: Lifetime ISA
- FCA: Financial Services Register
- FCA: Protect yourself from scams
- FSCS: Investments
Facts checked on 20 October 2026. Spotted an error? Tell us and we will correct it.