What’s the best way to invest your money?

How do you go about choosing the investments which will suit your priorities and your preferences as an investor?

There are a bewildering number of investment “products” on the market, which have been designed to meet different financial needs .

If there was an easy, one-size-fits-all strategy we’d all be using it. But we can help you to define your own investment priorities, and what investors call your “risk profile”: whether you’re prepared to be bold, and are prepared to risk your capital for the sake of higher returns, or whether you are “risk averse”.

  • You need to try to anticipate how you’ll feel at the end of three or five years or 10 years, if this sum of money hasn’t made a significant return.
  • Or if you get back less than the amount you originally invested.

And see our 3 Key Tips for Investors – below.

Jump down the page to your priorities:

Tax-free returns

Managed funds or DIY

Highest income

Highest capital growth

Lowest risk

Investing for longer-term / retirement income

Investing in stocks and shares

Investing directly in businesses

Investing ethically

1 Investing tax-free

Using your tax-free ISA allowance should always be your first investment decision.

If you’ve got £20,000 or less to invest this year, all your earnings on that could be tax-free if you do it within an ISA (Individual Savings Account) “wrapper.”

These are no longer just savings accounts. You can invest in a wide variety of products using your UK £20,000 tax-free ISA allowance:

Property ISAs

Investment ISAs

Income ISAs

Fund ISAs

Stocks & Shares ISAs

Lifetime ISAs

2 Manage investments myself or pay for a fund manager

Are you naturally hands-on and like to make your own decisions?

  • Do you have time to be actively involving in making investment decisions?
  • Do you understand risk, and know how the stock market works?

DIY fund management platforms

Or are you a fairly inexperienced investor:

  • You’re really too busy to actively manage your funds yourself?
  • You’re willing to pay a bit more in fees to have your money managed by an experienced fund manager?

Managed fund platforms

3 Highest income

  • High earning is everyone’s priority. But when you know that higher income investments are always going to be riskier, you’ll understand this is a judgement call you’re going to need to make very carefully.
  • You’ll see advice warnings on the product descriptions online: “your capital may be at risk”.
  • See our 3 KEY TIPS below, and diversify.
  • For high income you’ll be looking at structured investment products

Investments focused on high income

4 Highest capital growth

  • Again – who doesn’t? But you’ll need to weigh up the risk you’re willing to bear.
  • For high growth you’ll again be looking at structured investment products.
  • Take heed of the warnings. Again, your capital may be at risk.

Investments focused on growth

5 Lowest risk

  • Do you need to have these funds safely locked away?
  • You’ll be looking for more conservative, safer investments.
  • The returns will be quite a bit lower, but your capital will be protected – you’ll never get back less than the original lump sum you put in.

These investments are less risky:

structured deposits

savings accounts

cash ISAs

6 Investing for longer-term / retirement income

Putting money aside for later-life income is always a good decision.

You need to decide:

  • How much do you want to be actively involved?
  • Or are you happy to pay a management fee to have someone else manage your pension funds for you?

With a personal pension, the pension provider will manage the funds for you

personal pensions

With a SIPP (Self Invested Personal Pension) you choose which funds you invest in


7 Investing in stocks and shares

If you have funds to invest beyond your £20,000 a year ISA allowance, you just need to decide if you want to have your investment portfolio managed for you

managed funds

Or you can choose a platform where you can choose your own investments from thousands of stocks and funds   and manage your portfolio yourself

self-managed funds

8 Investing directly in businesses

Peer-to-peer (or P2P) is a way of lending your money more directly to entrepreneurial borrowers, and cutting out the middleman. You add your funds to a peer to peer provider’s investment platform and get a fixed return.

P2P investment

9 Investing ethically

More and more investors are guided by ethical considerations when making their investment choices.

And increasing numbers of funds are following SRI (socially responsible investment) guidelines and focussing on industries such as renewable energy and environmentally friendly transport, as well as exercising ethical standards in their investment decisions.

ethical investments


Experienced investors will always advise you to spread your risk across different companies or funds, different types of business, and different geographical regions.

Invest long-term. You should expect to invest for at least five years, preferably 10, in order to get decent returns. Otherwise you might be better leaving your money in a savings account. Don’t panic about short-term fluctuations in value.

Review your investments regularly. A particular stock may be performing badly. Or your willingness to take risks may have changed.

If you have any queries about any of the investment plans featured on the site, please contact our Investment Helpdesk on 0845 308 2525. And  if you’d like to be emailed with our latest investment offers newsletter please get in touch.

Important Risk Information: This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future. Different types of investment carry different levels of risk and may not be suitable for all investors. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice. * Details of how the Financial Services Compensation Scheme applies to investment firms can be found at fscs.org.uk.