A beginner’s guide to investing for young people

How to start building wealth in the UK

Kirsty Wake, Senior Paraplanner

Investing might seem intimidating, but starting early is one of the best ways to build wealth over time. This guide will show you why young investors should dive in, highlight simple UK-based investment options, and share essential tips to help you make informed and confident decisions.

According to the FCA Financial Lives Survey, 58% of adults under 35 in the UK are interested in investing, but many don’t know where to begin.

Why should young people start investing?

In 2023, inflation averaged 4.5%, meaning money in low-interest savings accounts is losing value in real terms. Investing can help you outpace inflation, preserving and growing the purchasing power of your money.

Starting early can significantly boost your wealth thanks to compound interest. For example, investing £100 a month from the age of 20 could grow to around £111,000 by the age of 50, assuming a 5% annual return. If you start at the age of 30, the same investment would only grow to about £62,000 by the age of 50.

Investing helps you achieve long-term goals like buying a home, starting a business, or saving for retirement. It's more effective than relying solely on savings.

Beginner-friendly investment products

Here’s a breakdown of the main investment products available in the UK:

Individual Savings Accounts (ISAs):
A tax-efficient account allowing up to £20,000 per year into investments like shares, funds, and bonds or cash. No tax on profits or dividends. Start with as little as £25–£100 per month.
Lifetime ISA (LISA):
Designed for saving for a first home or retirement. Under 40s can contribute up to £4,000 per year and receive a 25% government bonus (up to £1,000 annually).
Investment Platforms and Apps:
Apps like Moneybox, Plum, and Freetrade are beginner-friendly, allowing small, regular investments with minimal effort. Features like round-ups (investing spare change) make it easy to start.
Workplace Pensions and Private Pensions:
Auto-enrolment means most people are contributing to a workplace pension. Employers match contributions, giving ‘free money’ towards retirement. Check your pension statements regularly and consider increasing contributions if you can.

Key points to consider

Start small, start now:
You don’t need large sums to begin investing. Platforms allow contributions from as little as £1–£25 per month. Starting early helps overcome risk through time in the market.
Focus on diversification:
Spread investments across different asset classes like shares, bonds, and funds. Index Funds and ETFs are beginner-friendly options that track entire markets, providing instant diversification with low fees.
Understand risk and reward:
Investments can fluctuate, but historically, markets trend upwards over the long term. Younger investors can take on more risk because they have time to recover from downturns.
Avoid high fees:
Small charges can erode long-term returns. Choose platforms with low fees—look for fees below 0.5% annually.
Build a financial safety net first:
Ensure you have an emergency fund of 3–6 months’ living expenses in a high-yield savings account before investing.

Mistakes to avoid

One common mistake is chasing ‘get rich quick’ schemes. These often involve unregulated investments, such as cryptocurrency scams or ‘hot stock tips’, which can be highly risky and lead to significant financial losses. Instead, focus on more stable, regulated investment options.

Another mistake is not doing enough research before investing. Always ensure that you are using FCA-authorised platforms and take the time to understand the basics of investing. This knowledge will help you make informed decisions and avoid potential pitfalls.

Finally, panic-selling during market drops is a mistake that can undermine your long-term investment strategy. Market volatility is normal, and it's important to stay invested for the long term rather than reacting impulsively to short-term market fluctuations. By maintaining a steady approach, you can better weather market downturns and benefit from eventual recoveries.

Conclusion

Investing as a young person is one of the best decisions you can make for your financial future. By starting early, using beginner-friendly tools and avoiding common pitfalls, you can set yourself up for financial success.

At Crowe Financial Planning, we can help you:

understand the basics of investing and assess your risk tolerance
choose the right products, from ISAs to pensions, tailored to your financial goals
build a sustainable, long-term investment strategy to grow wealth with confidence.

The value of investments can fall as well as rise. You may not get back what you invest

Disclaimers

Crowe Financial Planning UK Limited is authorised and regulated by the Financial Conduct Authority (‘FCA’) to provide independent financial advice.

The information set out on this page is for information purposes only and is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. It does not constitute advice to undertake a particular transaction. Appropriate professional advice should be taken on specific issues before any course of action is pursued. Any advice provided by a Crowe Consultant will follow only after consideration of all aspects of our internal advice guidance.

Past performance is not a guide to future performance, nor a reliable indicator of future results or performance. The value of investments, and the income or capital entitlement which may derive from them, if any, may go down as well as up and is not guaranteed; therefore, investors may not get back the amount originally invested.

The Financial Conduct Authority does not regulate Trusts, Tax or Estate Planning.

Please be aware that by clicking onto any links to third party websites you will be leaving the Crowe Financial Planning website. Please note that Crowe Financial Planning is not responsible for the accuracy of the information contained within the linked sites.