Do-it-yourself options
‘Try to resist tinkering with investments too often, but don’t ignore them. Check on them every few months’
Alternatively, you can choose your investments yourself. This takes some effort, but it can be even more rewarding to see the shares or funds you choose perform well. You can buy investments through a broker, an investment platform – which is like a supermarket for shares and funds – or an investment app.
If you want to pick your own investments, then an online platform such as Interactive Investor or Cavendish Online can help. Once you’ve signed up, you can buy thousands of funds or shares via your online account.
For further help whittling down your choices, turn to the company you are buying your investments through. Some of these will provide lists of 60 to 70 preferred funds, while others offer ready-made investment portfolios, so you don’t have to do any stock-picking.
If you’d rather have a little more help, you could try a ‘robo-investor’ such as Nutmeg, Wealthify or Moneybox. These all offer ready-made investment portfolios that you choose based on how much risk you are prepared to take with your cash.
You could also use the investment app Plum. Download the app, open an account and link it to your main bank account. Plum will then analyse your spending and regularly take amounts it thinks you can afford to save from your bank account. It adds up little by little and you can then invest that money in funds, shares or bonds.
Think about where you are going to put your investments. If you buy them in a standard investment account, you may be taxed on the income you receive and any growth your investments achieve. You can avoid this by putting up to £20,000 a year into a stocks and shares ISA. This acts as a tax barrier, so your assets can grow free from capital gains, income and dividend tax. Find a list of authorised ISA managers at gov.uk.
‘It’s time to make your savings work harder’
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Once you’ve selected your investments, it’s time to sit back and watch how they perform. Try to resist tinkering with them too often, but don’t ignore them. Check on them every few months and remember that your risk profile may change as time goes on. It could be that your finances change and you can afford to take more risk with your investments, or it might be that you are getting towards the time when you’ll want to access your money. If it is the latter, then it is a good idea to gradually move your investments into lower-risk assets so that you minimise the chance that you’ll lose all your gains if there is a market plunge just when you want to sell.