By now you should have ticked off steps 1-3 of our Money-Smart Guide (go back to read them now if you haven’t). You’re free of high-interest debt, you’ve built an emergency fund, and you’re confident in the different types of accounts available to you. Now it’s time to start investing.


What is investing?

Investing is when you buy ‘assets’ such as stocks, funds, or bonds from the stock market, with the hope that they’ll appreciate in value. 

Investing can be a great way to grow your money over the long term and can offer higher returns than a current or savings account. It’s best suited to longer term goals (at least five years) as this allows enough time to ride the waves of the stock market and benefit from potential growth that can come with time in the market. While investing does involve risk – and you should expect some ups and downs along the way – it can pay to invest, for those who stay the course.

Read more about the investing basics.


Should I start investing?

You should start investing if you want to grow your money over time and work towards long-term financial goals – such as retiring early, or if you just want to build wealth! 

People mostly choose to invest because returns can typically be much higher than the returns you’ll get on cash savings alone. While the stock market does peak and trough in the day-to-day, and you could get back less than you invest, when you stand back and look at the bigger picture, the market generally trends upwards over longer periods of time.

That isn’t to say you should disregard cash savings – together with investing they make a powerful duo when it comes to tackling your financial goals on the whole.


Why should I start investing now?


You should start investing as soon as you can, to avoid missing out on potential gains and benefitting from things such as compound interest and pound-cost averaging. 

Compound interest is when you earn interest on the gains from your original investment. For example, if you invested £100 and saw a 10% return in year one, you’d have £110. If in year 2, you again saw a 10% return, the new amount would be £121 because you’d have earned interest on the £10 gained in year one in addition to the original £100 invested.

So the longer you leave your money invested, the more chance it has to grow.

Pound cost averaging means that when you invest small amounts of money regularly, no matter whether prices peak or drop, you’ll capture the average return of the market. Over the long term, you could end up with larger gains than if you only invest once or twice a year.


How to invest with confidence

Whether you’re an investing newbie or a seasoned hand, Moneybox makes it easy to invest. With a Moneybox Stocks & Shares ISA you can choose from one of three Starting Options – cautious, balanced, and adventurous. Each Starting Option is made up of a range of diversified tracker funds.

If you’re more comfortable with investing, you could choose to build your own investment portfolio with a range of tracker funds, exchange traded funds, and individual US stocks to invest in.

Investing faux pas to avoid

  • Trying to predict the market (it’s all about time in the market, not timing the market)
  • Not riding out the rough patches – you could end up with greater loss!
  • Not investing consistently

Ready to turn your money into something greater? Open a Stocks & Shares ISA today to get started today and get tax-free gains on investments up to £20,000 per tax year. Plus, you’ll earn 3.8% AER (variable) on any money you hold as cash before investing it.


Explore Moneybox Stocks & Shares ISA


Important to know

Tax treatment depends on individual circumstances and is subject to change.