Real Life Money

Free Guide

5 Steps to
Start
Investing

A plain English guide for complete beginners. No jargon. No products to sell. Just the basics — finally explained properly.

1

Understand why investing beats saving

2

Choose the right account (ISA vs pension)

3

Decide how much risk you're comfortable with

4

Pick a simple investment that suits you

5

Actually click invest — and keep going

Written by Leo DennisMaths teacher · Qualified Financial Adviser · Bristol

reallifemoney.co.uk

1

Step One

Understand why investing
beats saving

Most people know they should be investing. But without understanding why, it's hard to actually start. Here's the simple truth that changes everything.

The Inflation Problem
Inflation is the silent thief. If inflation runs at 3% a year, £10,000 sitting in a bank account has the purchasing power of roughly £7,400 in ten years. Your balance stays the same. What it buys you doesn't. Cash savings don't protect you from inflation — investing does.

Compound interest is the most powerful force in investing. When your investments grow, those gains also grow. £100/month invested from age 25 at 7% average return = around £240,000 by 65. Start at 35 and that drops to £120,000. Same money, half the outcome.

You don't need much to start. Most investment platforms let you invest from £1 a month. The amount matters far less than starting — because time in the market is your biggest advantage.

Investing isn't gambling. Gambling is a zero-sum game where someone wins and someone loses. Investing means owning a small share of real businesses that generate real value. Over long periods, stock markets have always grown.

Quick maths

£200/month invested for 30 years at 7% average annual return = approximately £227,000. The total you put in? £72,000. The rest — over £155,000 — is compound growth doing the work for you. That's why starting now, with whatever you have, beats waiting for the "right moment."

2

Step Two

Choose the right account

Where you invest matters almost as much as what you invest in. The right account can save you thousands in tax over your lifetime. Here's what you need to know.

The Wrapper Analogy
Think of an investment account like a wrapper around your investments. The wrapper determines the tax rules. A Stocks and Shares ISA wrapper means all growth and income inside it is completely tax-free — forever. That wrapper doesn't cost you anything extra. It just protects what's inside.

Stocks and Shares ISA — You can put up to £20,000 per year into an ISA. All growth is tax-free. All withdrawals are tax-free. This is your first port of call for investing.

Pension (SIPP) — You get tax relief on contributions (basic rate taxpayers get 20% added automatically — it's essentially free money). Can't access until 57. Best for long-term retirement saving.

General Investment Account (GIA) — No annual limit but no tax wrapper either. Growth is subject to capital gains tax. Use this once you've filled your ISA allowance.

Lifetime ISA (LISA) — If you're 18-39, the government adds 25% to your contributions (up to £1,000 free each year). Only usable for your first home or retirement after 60. Worth considering alongside a standard ISA.

Simple rule of thumb

For most people starting out: open a Stocks and Shares ISA first. Put your monthly investment in there. If you want to save specifically for retirement on top of your workplace pension, add a SIPP. Don't overthink it — the most important thing is starting, not optimising.

3

Step Three

Decide how much risk
you're comfortable with

All investing involves risk. But risk isn't something to avoid — it's something to understand, measure, and match to your own situation. Here's a simple framework.

Risk and Return Are Linked
Higher potential returns always come with higher potential volatility. A portfolio of 100% shares might return 8-10% annually over the long term — but it could also drop 30-40% in a bad year. A mixed portfolio of shares and bonds is steadier but grows more slowly. Neither is wrong — it depends on you.

Timeframe is the most important factor. If you won't need this money for 20+ years, short-term dips don't matter much. If you need it in 3 years, you can't afford to see it halve in value. The longer your horizon, the more risk you can take.

How would you actually react if your pot dropped 25%? Would you stay calm and keep investing? Or would you panic and sell? Be honest. If you'd panic-sell, choose a lower-risk portfolio — even if it grows more slowly.

Diversification reduces risk without sacrificing too much return. Don't put everything in one company, one sector, or one country. A global index fund gives you instant diversification across thousands of companies.

Three risk profiles — simplified

Cautious: 30% shares, 70% bonds. Steady, less exciting, less volatile.
Balanced: 60% shares, 40% bonds. The classic middle ground for most investors.
Adventurous: 80-100% shares. Higher long-term returns, more stomach-churning dips along the way.

4

Step Four

Pick a simple investment
that suits you

You don't need to pick individual stocks or follow the markets daily. For most beginners, a simple low-cost fund is by far the best starting point. Here's what to look for.

What is a Fund?
A fund pools your money with thousands of other investors to buy a large basket of shares or bonds. Instead of buying one company's shares and hoping it goes well, you own a tiny piece of hundreds of companies at once. This is called diversification — and it's the single most effective way to manage risk.

Index funds track the market rather than trying to beat it. They hold every company in an index (like the FTSE 100 or S&P 500) in proportion to size. Because no one is actively picking stocks, fees are very low — often 0.1-0.2% per year.

Check the OCF (Ongoing Charges Figure). This is the annual fee expressed as a percentage. Anything under 0.5% is reasonable for a fund. Anything over 1% should make you ask whether it's justified. Over 20 years, charges compound just like returns.

You don't have to pick individual stocks. Vanguard LifeStrategy funds, for example, give you a ready-made globally diversified portfolio in a single fund. You pick your risk level (20, 40, 60, 80 or 100% equity) and that's it.

What to look for in any investment

1. What does it actually hold? (Shares, bonds, property — or a mix?)
2. How much does it cost? (Check the OCF — aim for under 0.5%)
3. How long should you stay invested? (Most equity funds need 5+ years minimum)

5

Step Five

Actually click invest —
and keep going

This is the step most people never take. They read the books, watch the videos, open the account — and then hesitate. Here's what you need to know to actually get started.

Which Platform Should You Use?
For most UK beginners: Vanguard Investor (simple, cheap, limited to Vanguard funds), Freetrade (app-based, easy to use, good for ISAs), or InvestEngine (fee-free ETF platform). All are FCA-regulated. Start with whichever feels most intuitive — you can always move later.

Set up a regular monthly investment. Automating it removes the temptation to time the market. Set a standing order on payday. Even £50 a month is an excellent start. Increase it as you earn more.

Don't check it every day. Short-term market movements are noise. Your time horizon is years, not weeks. Checking daily causes anxiety and leads to bad decisions. Check quarterly at most.

Stay the course when markets fall. They will fall at some point — that's normal and expected. The investors who come out ahead are the ones who kept investing through the dips, not the ones who sold and waited for calm.

Keep a cash emergency fund separate. Before investing, have 3-6 months of expenses in easy-access savings. This means you'll never be forced to sell investments at the wrong time.

The simplest possible starting point

Open a Stocks and Shares ISA on Vanguard Investor or Freetrade. Choose a LifeStrategy fund that matches your risk appetite (LifeStrategy 80% Equity is a popular balanced choice). Set up a monthly direct debit of whatever you can afford. Don't touch it for 10 years. That's it.

Want to go deeper?

Learn it properly.
In 3 evenings.

This guide gives you the foundations. The Real Life Money investing course takes you all the way — with hands-on practice, real funds to explore, and a small group where you can ask every question you've ever had.

Real Life Money — Investing Course

3 × 90-minute evening sessions in Bristol
Maximum 12 people — you can actually ask questions
Interactive fund card game and investment simulation
Hands-on platform exploration — click invest for real
PDF session notes sent after every session
Confidence Guarantee — full refund if not satisfied

£75 for all three sessions · Book at reallifemoney.co.uk

reallifemoney.co.uk/investing-course

Real Life Money is financial education, not regulated financial advice. Leo Dennis is a qualified ex-financial adviser and secondary school maths teacher based in Bristol.

5 Steps toStartInvesting

Learn it properly.In 3 evenings.

5 Steps to
Start
Investing

Learn it properly.
In 3 evenings.