Most people asking how to start investing are asking which fund to buy. That is the last decision, not the first.
Most people asking how to start investing are really asking which fund to buy. That is the last decision, not the first — and getting to it in the wrong order is how people end up with money in the market that should have been in a savings account.
The sequence below is not controversial. Each step earns a more certain return than the one after it.
The emergency fund comes first because investing without one means selling at whatever price the market offers on the day your boiler fails. Three to six months of essential spending, in an easy-access account.
Expensive debt comes next. Clearing a card charging 24% is a guaranteed 24% return. No investment offers that with any certainty.
Then the employer pension match. If your employer matches contributions, that is an immediate return of 100% on the matched portion. Nothing else on this list competes, and skipping it is declining part of your salary.
Only after those three does the question of what to buy become worth asking.
Three decisions, in this order.
The wrapper is the tax treatment: a stocks and shares ISA, a pension or SIPP, or an ordinary taxable account. For most people starting out the ISA is the default — £20,000 a year, no tax on growth or withdrawals, and accessible if circumstances change. Our ISA vs SIPP guide covers when the pension wins instead.
The platform is who holds it. The main difference between platforms is cost structure: some charge a percentage of your holdings, some a flat monthly fee. Percentage fees are usually cheaper on small balances, flat fees on large ones — the crossover is often somewhere around £30,000 to £50,000.
The fund is what you own. This is genuinely the least consequential of the three for a beginner.
An index fund buys the whole market rather than trying to pick winners. A global tracker gives you thousands of companies across dozens of countries in a single holding.
The case for it is not that active management is worthless. It is that most active funds fail to beat their benchmark after fees over long periods, that you cannot identify the exceptions in advance, and that index funds cost a fraction as much. Since costs compound against you exactly as returns compound for you, that fee gap matters enormously over thirty years.
A single global tracker or a multi-asset fund at a set risk level is a complete portfolio. It does not need improving in year one.
Regular monthly investing beats waiting for a good moment, for two reasons. It removes the decision, which is where most self-inflicted damage happens. And it means you buy at a range of prices rather than betting everything on one.
Start with an amount you will not resent in a bad month. £50 invested consistently for twenty years does more than £500 invested twice and then abandoned.
Three layers, all worth checking:
Platform fee — typically 0.15% to 0.45% a year, or a flat monthly charge.
Fund charge — the ongoing charges figure. Global trackers commonly sit between 0.1% and 0.25%.
Trading costs — some platforms charge per trade, many waive it for regular monthly investing.
Under about 0.5% all-in is a reasonable target for a simple portfolio. Above 1%, ask what you are getting for it.
Investing money you need soon. Anything with a deadline inside five years belongs in cash.
Checking daily. Volatility is the price of the return, not a signal to act.
Selling in a fall. The falls are when the long-run returns are earned. Investors who sell in March and return in September reliably capture the fall without the recovery.
Buying what performed best last year. Past performance is the least reliable predictor on the page.
Leaving it in cash inside the ISA. Money paid into a stocks and shares ISA sits as cash until you actually buy something. Check that the second step happened.
Build the emergency fund. Clear expensive debt. Capture the full employer match. Open a stocks and shares ISA with a platform whose fees suit your balance. Set up a monthly payment into one global index fund. Then leave it alone and go and do something else.
Once you hold more than one thing in more than one place, the multi-currency portfolio tracker keeps the whole picture on one sheet.
The investment platform comparison covers what each provider charges, and what is an ISA covers the wrapper in detail.