March 31, 2026

How to start investing in the UK

When it comes to building long-term financial security, investing is one of the most powerful tools available. Yet for many people, getting started can feel overwhelming. With unfamiliar terminology, market ups and downs, and the fear of making mistakes, it’s easy to put investing off altogether.

Investing continues to outperform cash ISAs

New data from Moneyfacts shows that investing has outperformed cash savings for a third consecutive year, despite previously elevated cash ISA rates. The data raises important questions about the risk of holding too much cash — particularly ahead of the cut to the cash ISA allowance for under-65s, due to be implemented from April 2027.

Moneyfacts found the average investment ISA fund saw growth of 11.22% between February 2025 and February 2026. By contrast, the average cash ISA interest rate was just 3.48% over the same period.

This average is down year-on-year, reflecting base rate cuts from the Bank of England over the past 18 months. Since September 2024, the Bank of England has cut its base rate six times — from a high of 5.25% to the current rate of 3.75% — and may cut further in 2026 depending on global events. This will have a further negative impact on average cash savings rates.

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, noted that investing ISAs have now outperformed cash ISA returns for a consecutive year, with stocks and shares returning around three times more than a cash ISA over the past 12 months based on average returns.

Of course, there is no guarantee that investing will outperform cash, and you should be aware that the value of your investments — and any income from them — can go down as well as up.

Not everyone will feel confident enough to invest straight away, but with the right guidance you can start small and gradually build the knowledge and confidence to grow your portfolio over time. Here’s what you need to know about how to start investing in the UK.

Why investing matters

Keeping money in cash savings accounts may feel safe, but over time inflation can reduce the real value of your savings — meaning your money may not go as far in the future as it does today.

Investing, on the other hand, gives your money the potential to grow faster than inflation over the long term. While investments can rise and fall in value, historically markets have delivered stronger returns than cash over extended periods.

Put simply: saving helps protect your money, while investing can help grow it.

There is no guarantee that investing will outperform cash, and the value of investments — and any income from them — can go down as well as up.

Step 1: set clear financial goals

Before investing, it’s important to understand what you want your money to achieve. Different goals may require different investment approaches. Common objectives include:

  • Building long-term wealth
  • Saving for retirement
  • Funding children’s education
  • Generating future income
  • Supporting major life plans such as buying a home

Knowing your goals helps determine how much risk you can take and how long you can invest for.

Step 2: understand your time horizon

Time is one of the most important factors in investing. Generally:

  • Short-term goals (under 5 years): lower-risk options may be more appropriate
  • Medium-term goals (5–10 years): a balanced approach is often suitable
  • Long-term goals (10+ years): investors can typically take on more risk for potential growth

The longer your investment timeframe, the more time you have to ride out market fluctuations.

Step 3: know your attitude to risk

All investments carry some level of risk. The key is finding an approach that matches your comfort level. Your risk tolerance depends on factors such as:

  • Your financial stability — whether you are prepared to accept the possibility of losing money
  • Your investment timeframe — whether you can afford to wait for returns
  • Your personal comfort with market ups and downs

A well-diversified investment portfolio can help manage risk while still aiming for growth.

Step 4: choose the right investment vehicle

In the UK, one of the most popular ways to invest is through tax-efficient accounts.

Stocks and shares ISAs

These allow you to invest without paying income tax or capital gains tax on your returns. The Government is due to cut the cash ISA allowance for under-65s to £12,000 from April 2027 — a deliberate measure to encourage more people to put their money to work through investment.

Pensions

Pensions provide tax relief on contributions and are designed for long-term retirement savings.

General investment accounts

Used when ISA allowances are fully utilised. Choosing the right structure can make a significant difference to long-term returns.

Step 5: start small and invest regularly

A common misconception is that you need a large lump sum to begin investing. In reality, many people start with modest monthly contributions. Regular investing offers key benefits:

  • Reduces the pressure of trying to time the market
  • Builds disciplined saving habits
  • Allows investments to grow steadily over time

Consistency is often more important than the initial amount invested.

Step 6: think long term

Successful investing is rarely about quick wins. Instead, it focuses on patience, discipline, and staying committed to your strategy. Market ups and downs are normal, but reacting emotionally can harm long-term returns. Having a clear plan helps you stay on track through changing conditions.

Why financial advice can make a difference

With so many investment options available, it can be difficult to know where to start. Professional financial advice can help you:

  • Identify suitable investment strategies
  • Manage risk appropriately
  • Build a diversified portfolio
  • Stay aligned with your financial goals
  • Avoid costly mistakes

An independent financial adviser can help you assess the best way to balance access to funds with long-term savings growth — giving you clarity and confidence as you begin your investment journey.

Start planting your seeds today

Investing doesn’t need to be complicated or intimidating. By starting early, investing regularly, and focusing on long-term goals, you can give your money the best chance to grow over time.

If you’d like guidance on how to start investing, or want to review your current financial plans, speaking with an independent financial adviser can help you take the next step with confidence.

Get in touch today to begin building your financial future.

Sources and further reading

Disclaimer: information is based on publicly available data and government announcements at the time of writing (March 2026) and may be subject to change.

Risk statement: The financial information contained within this article is our opinion and for guidance only, and does not constitute advice which should be sought before taking any action or inaction. The value of your investments (and any income from them) can go down as well as up. The Financial Conduct Authority does not regulate estate planning, tax advice, cashflow planning, powers of attorney, or wills.