Investing for beginners UK version

Investing For Beginners In The UK – A Complete Guide

This article was last updated on August 24, 2022

Learning how to invest is one of the best things you can do for your financial state. It gives you the ability to set aside money and, as many like to put it, “have it work for you.” When properly utilized, investing can give you a significant boost in funds and make your future much sounder. Aside from being a potential source of passive income, investing can also be an active part of your life. If you choose to, you could even make it your day job, like many professional traders. However, you will first need to learn investing for beginners in the UK.

Before you decide on the approach you want to take, you will first need to learn the basics of what investing entails and what you need to get you started. As a result, we have compiled this guide to investing for beginners in the UK. In it, you will find all of the information you need to hit the ground running and avoid the more common pitfalls new investors tend to experience.

What You Need To Start

Here is a short list of all the basic things you will need to do before you can start your investing career. These are the fundamental factors when it comes to investing for beginners in the UK.


Funds are the most important part of investing. Without funds, you have nothing to invest. However, this does not necessarily mean that you need to have a lot of money at hand. While it would be ideal to start with a larger sum, in reality, all you need is enough to meet your broker’s minimum deposit requirement.


Strategy is integral to your investing career. Before you move on, you need to decide on your approach to investing. It is important to decide if you are going to be doing this as a day job, or as a passive way to earn some extra cash. Additionally, if you are thinking of becoming a professional, you need to decide if you want to be an active day trader, or a long-term investor.

Brokerage Service

A broker is the second thing on your checklist. It is very important to do your research here and pick the right one. Since they are all different and offer various services, you need to chose the one that best suits your needs. Look at their available tools, minimum deposit and withdrawal amounts, commision fees, and more. All of these are factors that will affect your gains.


Choose your market. There are numerous assets that you can invest in. You can put your money in everything from stocks, bonds, currencies, futures, crypto assets, commodities, and more. Picking a market and sticking with it is a great way to learn how it works and all of its nuances. Mixing several ones is also a good strategy, but don’t spread yourself too thin.

Read More: What Are Stonks?

Different Aproaches To Investing For Beginners In The UK

As we mentioned, there are different approaches one can take when investing. These vary from person to person and depend on your end goal. The most basic question here is how you want to invest your money. You could put it in something and forget about it. Alternatively, you could invest in different assets every now and then, regularly checking up on them. These two are more geared towards those who are not looking to quit their day job. Meanwhile, there is also the option of going all-in and dedicating all of your time to becoming a professional day trader.

There are numerous strategies that you can implement when investing your money. You should choose these based on your style of trading and experience. Here are some of the most popular strategies for investing for beginners in the UK.

Managed Account

A managed account is one of the easiest and least engaging ways to invest in your future. In this case, you place your funds in an investment account that is then managed by a skilled professional. They will use their knowledge of the market to conduct trades instead of you. In return, they will charge you a fee, while the majority of the profits are left for you. This is a convenient way for you to reap the rewards from investing, without having to do almost anything other than provide the funds.

While generally considered to be one of the safer ways to invest, managed accounts still hold some potential risks. Firstly, the account manager needs to be someone you trust. Because they have access to all of your funds in the account, you need to be sure that they will not abuse their position. Secondly, while account managers tend to invest people’s money in safer assets, they can still prove to be poor traders. As a result, there is still a chance that you can lose a great deal of your funds.

Growth Investing For Beginners In The UK

Growth investing is possibly the simplest strategy in investing. All you have to do is identify an asset you believe is going to increase in value and you invest in that. It does not matter what its current price is, as long as it rises. However, in order for this strategy to be effective, you need to be knowledgeable about the market and its movements. Your decisions must be based on solid research and facts. Otherwise, you are simply speculating, which is more akin to gambling.

This strategy is also considered to be among the safer ones. In most cases, investors will pick large, proven industry leaders that are unlikely to fail suddenly. Instead, they will slowly continue to increase in value. However, this does mean that your profits will also grow at a slower pace. In the long run, growth investing will often be outperformed by riskier methods.

Value Investing For Beginners In The UK

Value investing is another one of the fundamental strategies for trading in different assets. Here, investors will identify stocks they believe to be undervalued and purchase them with the intent to hold on to them. While similar to growth investing, value investors will look for stocks that are low-priced. As such, the strategy works only in the long run. This means that you need to be patient and unaffected by temporary movements in the market. Many investors who choose this approach will exit their positions at the first sign of a downturn. They then miss out on the opportunity for profits later on, when the stock prices rise to new heights.

However, in order to properly identify undervalued stocks, you will need to do extensive research into their underlying companies. This is how you can determine if they possess the necessary traits and qualities to be successful in the long run and actually appreciate in value. In reality, many consider value investing not to be so much concerned with stocks or the market, as it is with analyzing corporations and industries.

Dollar-Cost Averaging

While not a full-on investing strategy on its own, dollar-cost averaging is a great way to supplement your plan. With this approach to investing, traders will decide on how much money they want to put into an asset. They will then break that sum up into increments and invest these on a regular basis. For example, you can decide to invest $500 at the start of each month. By doing so, you will have a clear plan of action and eliminate the need to constantly monitor the market. If you are someone that is looking to implement a growth or value strategy, this can be a great way to invest and stick to your long-term plan.

This strategy is often utilized by retirement funds or savings accounts that offer investment opportunities. One such example is the 401k plan, popular in the United States. However, dollar-cost averaging is also ideal as an investing-for-beginners strategy. It provides traders with a clear plan of action. Once outlined, they know what they need to do and can stick with that without deviating. It is less likely that investors will make snap decisions like buying trendy assets or dumping ones they own because of a slight downturn, It also splits up a potentially large investment sum into smaller and more manageable portions. This makes the venture more accessible. As with all previous strategies, this one requires extensive research into a company beforehand.

Momentum Investing For Beginners In The UK

Momentum investing is a strategy where traders will, more or less, go along with the movements of the market. Investors using this strategy believe that assets that are growing in value will continue to do so. Accordingly, those that are depreciating will also continue to do so. Momentum investors will then make their moves in accordance with these predictions. They will buy assets that are on the rise, while short-selling those they believe are falling.

Since the strategy is highly dependant on market movements, those who employ it must always be ready and available to manage their positions. As such, it is best suited for active day traders who are constantly engaged in monitoring the market. Momentum investors need to be able to quickly buy and sell assets in order to stay ahead of the market and remain profitable.

Because momentum investors make short-term trades, they do not need to focus on company fundamentals so much. Instead, they rely on copious amounts of technical data. They will analyze this and make moves and predictions based on it. While a feasible strategy, such an active approach might be a bit more difficult for beginners investing in the market.

Contratian Investing

Contrarian investing is another example of an overall approach to investing. Here, investors will make trades against the movements of the market. This means that they will buy assets that are being heavily sold by holders and sell ones that are being bought up. Contrarians believe that all market news and insight is already late. When the general consensus is that an asset is going up, that means that it has reached its peak in price. Investors have put in as much money as they care to and have no more spending power to further raise the price. Meanwhile, when an asset is “experiencing a downturn” it means that all pertinent parties have already sold and the decrease is nearing its end.

Basically, whatever the news is, it is too late and the reported events have already occurred. As such, it is best to get ahead of the cycle and do the opposite. Contrarian investing is similar to value investing this way, as both look for undervalued stocks at a cheap price. Also similar to value investing, contrarians need to stay informed of the market and research the companies they are investing in. Since they are looking for future upturns, they need to be sure that the organization will be able to turn things around.

Index Investing For Beginners In The UK

The index investing strategy aims to copy a specific index or exchange-traded fund (ETF). Here, investors will reproduce the moves taken by a market index, buying all of the same assets and securities. The idea is to take advantage of the financial expertise and insight that a prominent index like the DOW has behind it. By copying its moves, traders are able to recreate that on a smaller scale. This is another example of a tactic that does not require too much involvement or know-how. As such, it is suitable when investing for beginners in the UK is concerned.

Dividend Investing For Beginners In The UK

Some companies and organizations offer dividends to their shareholders. This is a great way to incentivize buying and holding stock. Many people build extensive portfolios of shares that offer dividends, essentially creating a regular passive income for themselves. Alternatively, dividends can be invested back into the stock for further expansion of your position. Market indexes are another great source of safe dividend stocks.

See Also: Forex Vs Stocks

What Is A Broker?

A broker is an intermediary between an investor and an exchange market. The broker facilitates the purchasing and sale of assets on behalf of the investor. This is necessary because exchanges only accept orders from member entities. A broker can be either an individual or a company. In exchange for their services, brokers will charge investors a commission fee.

At the same time, brokers can also have additional sources of revenue like receiving payment for order flow or offering supplemental services. The latter can include financial advice, money management, subscriptions to various advanced tools, and more.

Making Sure A Broker Is Trustworthy

There are many online brokers for you to choose from. All of them advertise different things. Some will promise a 0% commission fee, while others might come with professional-grade tools and easy movement of funds. This can be especially confusing for newcomers to the industry. Beginner traders will often get overwhelmed by the sheer number of options.

However, perhaps the most important factor when it comes to picking a broker is its security. In the UK, the regulatory body that monitors such financial organizations is the Financial Conduct Authority (FCA). The FCA is an independent watchdog that oversees the conduct of financial markets, banks, credit card companies, insurance providers, stockbrokers, and credit unions. All of these need to be licensed by the FCA if they wish to offer regulated services in the UK. This includes compliance with disclosure and listing regulations, as well as setting standards for everything from marketing to leverage limits.

When looking at potential brokers, UK customers should be on the lookout for an FCA-licensed marking. This means that that particular broker is fully compliant with all of the Financial Authority’s requirements and standards. As such, it would generally be considered trusted and a safe place to deposit your money.

Top Trading Brokers In The UK


IG is one of the oldest and most trusted UK brokers. It offers access to over 17,000 assets, including stocks, Forex, commodities, bonds, ETFs, indices, securities, options, and more. The minimum deposit on the platform is £250, which is quite reasonable considering that it’s one of the older services in the industry.

The platform charges a fee for every transaction conducted buy this will vary depending on your volume. Generally, the range is between £8 and £3. Meanwhile, IG also applies a custody fee to all of your assets, but this will decrease based on your number of yearly trades. It will start at £96 and can go down to zero.

  • Trusted Broker
  • Low Commission Fees
  • Low Minimum Deposit


    eToro is probably the most popular online trading platform at the moment. While not as fleshed out as the older, more professional ones, it has quickly gathered a huge user base. This is in no small part due to the broker’s aggressive marketing campaign and low commission fees. eToro is also very easy to use, making it ideal for investors new to the scene. Its simple user interface and low initial entry fee of $200 only further the accessibility of the platform. Lastly, eToro has an extensive copy trading system allowing you to copy the moves of many prominent investors. All of this is great when talking about investing for beginners in the UK.

    However, the broker does come with some caveats. For one, it does not support the British pound. Instead, all transactions are conducted in USD. This means that you will need to pay for the conversion fees on the platform. Meanwhile, while the low fees are great, they are only possible because eToro probably receives payment for order flow. While not proven in this case, it is a common practice among brokers that offer such services. As such, it can be a concern for some users who are worried about a potential conflict of interests. And finally, eToro has a history of liquidity issues. In times of volatility, the platform has been known to stop the trading of an asset, costing users potential gains.

    • Low Minimum Deposit
    • Low Fees
    • Copy Trading System
    • Simple UI
    • Does Not Support GBP
    • Receives Payment For Order Flow
    • History Of Liquidity Issues

    Interactive Brokers

    Interactive Brokers is one of the most highly regarded platforms among the older and well-established ones. Over the many years that it has been active, Interactive Brokers has innovated in multiple ways and has several industry firsts under its belt. Today, it offers access to over 135 international markets in a highly professional platform. The broker’s tools are among the most detailed and comprehensive. Industry professionals and market leaders use them on a daily basis.

    The broker offers two commission fee models- fixed and tiered. The former charges £3 for western-European stocks up to £6,000 and £6 for all other ones. Meanwhile, the tiered system applies to stocks and other assets over £6,000 and applies a 0.05% fee. Additionally, while customers will receive market data for free, it will be a delayed feed. Those wishing to view markets in real-time will need to pay a subscription fee to each exchange separately. This can range between £1 and £10 per month.

    • Professional-Grade Tools
    • Trusted Broker
    • Flexible Commissions
    • Harder To Use For Inexperienced Investors
    • Real-Time Market Data Requires Monthly Subscription

    Trading 212

    Trading 212 is another newcomer to the online trading world, this one hailing from the UK. Like eToro, Trading 212 positions itself as a user-friendly platform with low fees and lots of educational content. As such, it’s mostly aimed towards learners and casual traders. Customers can also trade in fractions of shares that are too expensive. This makes it even more accessible and lowers the barrier to entry.

    However, like all disruptors in the industry, this one also comes with caveats. For one, although there are no commission fees, the platform does charge a 0.70% fee on all funds deposited after the initial £2,000. The platform itself and the available tools are also quite limited. While simple and accessible, they are not suited for experienced and professional traders. All of this makes it a good investing platform for beginners in the UK.

    • 0% Commission Fees
    • No Fees On First £2,000 Deposited
    • Simple UI
    • Educational Material
    • 0.70% Fee On All Deposits After Initial £2,000
    • Limited Tools And Utility
    • Limited Available Assets

    Saxo Markets

    Saxo Markets is a great online trading platform. However, it is not for everyone. With its £500 minimum deposit and numerous fees, it is definitely geared more towards investors with a larger investment capital. The platform itself is quite good. It offers access to over 30,000 instruments and an extensive set of tools for traders to utilize. These are displayed in a convenient and easy-to-use UI that allows investors of all levels to make the most of the platform.

    However, this does come at a price. Saxo Markets has a minimum deposit of £500 for regular users. There is also a commission on all UK stock trades in the amount of 0,10% or £8. Whichever is higher. Meanwhile, US stocks come with a $10 commission. Aside from these, Saxo also charges a 0.12% custody fee per year. The broker applies this to the price of the assets in your account. Real-time market data is also provided via a subscription service that charges around £6 per exchange for the non-professional version. Lastly, there is an inactivity fee that will charge £25 if your account has been inactive during the previous quarter. As far as investing for beginners in the UK goes, this might not be the best place to start. However, it is an ideal platform to use later down the line, when you are more commited.

    • Trusted Broker
    • Professional-Grade Tools
    • Wide Variety Of Instruments
    • High Minimum Deposit
    • High Fees


    All things considered, investing for beginners in the UK is not as complicated as it might seem. As long as you remain calm and follow the steps in this guide, you should be fine. One should always conduct the proper research and due diligence before making moves on the market. A good plan based on well-vetted information is also crucial, as is the patience to stick to it. As for brokers, always make sure that they are properly regulated and offer a commission charge scheme, suitable for your needs.

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