What are the best UK investments for beginners?

There are many different investment options available to beginners in the UK stock market, but which is the best?

by | Last updated 2 Mar, 2023 | How to start investing

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When first looking for the best UK investments for beginners, a common belief is that investing requires a lot of money to get started. While that may have been true in the past, drastic reductions in trading fees and access to information have made investing in the stock market far more accessible.

Today, there are many options available which offer multiple investment options with small amounts of money. And these investment options extend to beginners in the UK as well.

Let’s take a closer look at what could be some of the best and safest investments for beginners in the UK. And also explore some helpful strategies to get the wealth-building process rolling.

What are the most suitable investments for beginners in the UK?

Before jumping in, I believe it’s critical to devise an investment strategy. No doubt, every investor, myself included, wants an investment strategy that yields the highest profits. But there is also the element of risk that needs to be considered.

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The first thing investors need to do is outline their financial goals. What is the main objective? Is it saving for retirement? Buying a boat? Becoming a vigilante crime fighter dressed as a bat?

Everyone has different goals. And depending on an investor’s personal circumstances can make various investments unsuitable. This can help narrow down which types of UK shares I should add to my portfolio, growth, value, or income.

Diversification is also a critical step in mitigating risk. By owning a collection of companies from different industries, the threat of a disruption in one sector or company is less likely to damage a portfolio’s overall return.

With that in mind, what are the best-suited investment options for investors, including beginners in the UK?

  • Savings Account – Arguably, one of the safest ways to build wealth is to put money into a bank and receive interest. However, with the interest rate being close to 0% over the last decade, the level of returns has been pretty abysmal.
  • Mutual Fund – Buying shares in a mutual fund allows individuals to hand all of the investment and portfolio decision-making requirements to a professional in exchange for an annual fee. Buying an investment fund is a popular choice for many beginner investors.
  • Robo-Advisor – These services manage investments using computer algorithms. They typically charge low fees and have much lower minimum capital requirements than mutual funds.
  • Index Funds – These funds track a specific market index. By owning shares in an index tracker fund, investors can mimic the performance of the general stock market but never beat it. Since these funds are managed by stock trading algorithms, annual fees are exceptionally low, typically around 0.1% of invested capital.
  • Individual Stocks – Choosing to play the stock market this way requires high levels of knowledge and emotional discipline that may individuals lack. Therefore, it’s not a suitable option for everyone. However, the investors that are able to spot winning stocks can significantly outperform the stock market and accelerate the wealth-building process. UK investors can also leverage tax-efficient accounts, like the Stocks and Shares ISA, to further maximise wealth generation.

Each investment option has its advantages and disadvantages. And most require access to an investment platform through a broker like Interactive Brokers.

The decision of which UK investments are best for beginners is ultimately a personal question. But there are qualified professionals to help and provide financial advice if needed.

Regardless of the method used, it’s important to remember that nothing is risk-free, especially when it comes to the stock market. And if poor investment decisions are made, it’s possible to destroy wealth rather than create it.

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5 helpful tips for beginner investors?

Despite what many social media influencers and investing “gurus” suggest, investing is not easy to master. And luck can very easily deceive someone into believing their analytical skills are superior before making terrible investment decisions.

Fortunately, there are some steps beginner investors can take to avoid falling into this trap:

  • Remember the investment goals – Avoid investing in assets or stocks that don’t match the overall investing strategy.
  • Start small – Take baby steps and learn along the way. Every investor will eventually make a mistake, even professionals. The trick is to learn from them.
  • Manage expectations – Investing takes time to deliver results. And while there is the occasional story of someone becoming a millionaire in a short space of time, the vast majority that tries end up losing everything.
  • Never stop learning – The field of investing is immensely complicated and deep. There is always more to learn. And investors who extend their knowledge will be able to make more informed decisions in the future.
  • Emotional disciple – It’s easy to come off-course when seeing other investors make a killing trading a particular asset or stock. However, pursuing gains based on a fear of missing out is arguably the most common way investors end up losing money while cutting the wealth-building process off at its knees. For many, this is one of the hardest challenges to overcome when searching for the best UK investments for beginners.

What if I have no money to invest?

Even the most skilled investor in the world can’t generate profit without some starting capital. And while it doesn’t take much to get the ball rolling, consistently monthly investments have proven to be the best method of succeeding within the stock market.

If an investor can’t find extra capital for monthly contributions from their personal income, then an alternative is to cut living expenses to save money.

Some of the most common ways to save money include:

  • Cancel barely used subscriptions such as video streaming services, gym memberships, or other similar drains on capital.
  • Avoid eating and drinking outside. Make coffee at home (This saved me quite a considerable amount of money for investing each month).
  • Avoid relying on taxis and walk to nearby locations.
  • Learn to style your existing clothes and stop buying new ones for every other occasion.
  • Don’t go shopping if you don’t need anything. Shopping is an expensive and addictive hobby.
  • Consider shared living. It will reduce all costs of rent and utility bills.

How can I become a millionaire in the stock market?

There are countless methods of building a seven-figure portfolio in the stock market. However, the strategy with the highest success rate continues to be long-term investments. Buying and holding stocks based on the underlying business’s ability to deliver future profits is a proven method of building wealth.

Sadly this process takes a long time. But for those seeking to build a nest egg, it can lead to a comfortable retirement. To demonstrate, £500 invested each month at an average annual return of 10% will transform into just over a million pounds within 30 years.

This, of course, assumes that the investor is able to match the historical average return of the stock market for the foreseeable future. It’s also ignoring the hurdles created by stock market crashes and corrections that will undoubtedly happen along the way. But it does clearly show how relatively modest monthly contributions can lead to substantial wealth in the long run.

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Views expressed on the companies and assets mentioned in this article are those of the writer and, therefore, may differ from the opinions of analysts in The Money Cog Premium services.

Written By

Saima Naveed

Saima spent the early days of her career advancing the finance office of a prominent manufacturing business. After taking a sabbatical, she decided to use her expert knowledge and apply it to the stock market. Now, 10 years later, she manages a substantial portfolio built using detailed and thorough analysis.

Outside The Money Cog, Saima is an avid supporter of empowering women in the workplace. She is currently working very closely with Women of Wonders Pakistan to help other women achieve their career goals.

Current Holdings


Edited & Fact Checked By
Zaven Boyrazian MSc

Zaven has worked in several industries throughout his career, from aircraft factories to game development studios. He has been actively investing in the stock market for the better part of a decade, managing over $1 million across multiple portfolios.

Specializing in corporate valuation, Zaven employs a modern take on the principles set out by Benjamin Graham to find new opportunities at fair prices.

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