Beginner Investors

Every year, you can shield up to £20,000 into a Stocks and Shares ISA without having to pay any tax on your investments or any interest you earn. But fewer than 1 in 6 UK adults currently hold a Stocks and Shares ISA, despite the fact that it tends to perform much better than a Cash ISA in the long term.

Short-term investing does carry higher risks, as market swings may not work in your favour when you need access to your money. But long-term investing is much more likely to pay off. In any 10-year period in recent history, stocks and shares have delivered better returns than cash 90% of the time.

A ready-made portfolio will include a sensible 'suite' of companies that have a good track record of delivering long-term returns. But you will have to decide how much risk you want to take. If you don't want to be exposed to much volatility, and you'd prefer to have access to your money sooner rather than later, consider a low-risk portfolio.

If you're happy to take on a bit more risk, and don't need the money for 5 years or so, consider a medium-risk option. But if you're comfortable with bigger ups and downs and plan to keep your money locked away for many years (7+), you may want to consider a high-risk portfolio.

Ready-made portfolios are a good option for beginner investors because of their simple charging structure. Typically, you'll pay an 'all-in' fee below 1 percent, so it will be easier to understand how the charges will impact on your returns.

To get started, you'll usually be asked a series of short questions. The answers you provide will determine which portfolio (basket of investments) you'll be allocated. This will range from a low-risk portfolio - in which most of your money is kept in low-risk assets like cash and bonds - to a high-risk portfolio - in which most of your money goes into stocks and shares.

Thanks to new technology, greater competition and the introduction of online platforms and ready-made portfolios, the cost of investing has fallen in recent years. Tax-free allowances for ISAs have also risen significantly - jumping from £11,280 in the 2012-2013 tax year to £20,000 since the 2017-2018 tax year.

The savings limit for Junior ISAs also rose from £4,368 in the 2019-2020 tax year to £9,000 since the 2020-2021 tax year. But you don't need a lot of money to start investing. Even a small contribution of £50-£100 a month can add up after many years.

If you're looking to get a bit more organised with your finances but don't know where to start, a financial coach might be a good option for you. They can't give you professional advice like a qualified financial adviser would, but you can learn a lot about how to manage your money.

Financial advisers, meanwhile, can give you expert guidance on how to choose the right products to meet your financial goals. Some may even offer you a free consultation to help you get started.