Money is a major part of human life. However, once you get past the basics, like paying bills and buying food, your thoughts may well turn to investing for the future.
Yet basic financial understanding and confidence in investing is something a lot of people struggle with.
According to survey results published in May 2025 by the Financial Conduct Authority, 61% of people with more than £10,000 in potentially investible assets held at least three-quarters of those assets in cash rather than investments.
Meanwhile, the gender investment gap is growing, particularly among Gen Z and millennials. Recent data suggests 41% of men aged 18-34 invest, compared to just 20% of women.
Investing can increase individual net worth – it gives your money the chance to grow, and if done successfully, can generate passive income.
So, Metro spoke to Nisha Prakash, lecturer in Financial Management at the University of East London, to get some beginner insight. Specifically, simple hacks you need to master before taking the leap.
Set clear financial goals and define the ‘why’
First things first, Prakash says that before you start investing, you need to have a general idea of why you’re doing it with clear financial goals.
This could include buying an asset, for example a house or car, paying for wedding expenses, funding children’s education, or, if you’re thinking more long-term, retiring.
‘This will set the timeline and target, which could help you choose the financial instruments based on the required risk-return,’ explains Prakash.
Investing – in it’s most basic form – means buying something in the hope it will increase in value.
So once you know what you’re aiming for, you can start looking at options such as ISAs, or stocks and shares, with more clarity.
Understand your risk tolerance
On that note, don’t dive headfirst into something you know little about, nor can afford. Prakash asks: ‘How much volatility can you handle?’ Meaning, can you afford to put all your eggs in one basket? Or, are you better off playing the long game? Aka, taking baby steps with your cash to lower the risk.
Prakash notes that many don’t realise that investing is a spectrum, and there a various ways you can grow your money. It’s not just like what you see in the movies: men in suits shouting and screaming at stock market monitors. If you want it to be, investing can be stress-free.
The expert says: ‘There are many online questionnaires available to measure risk tolerance. Just because stocks give you a high return, it might not be ideal for everyone.’
For some of us, Prakash states that fixed-rate ISAs work the best. These are low-risk savings accounts where you agree to lock your money away for a certain period. In exchange, you’re guaranteed a tax-free interest rate. There are different lengths of fixed rates, typically ranging from one to five years.
However, they often come with a clause: you cannot withdraw money or close the account during the fixed rate period without a penalty. But, because you’re agreeing to leave your money for a set amount of time, you’re usually rewarded with a higher interest rate.
If you know you’ll need to dip in and out of your savings pot during the fixed time, you’re better off looking into an easy access ISA.
Fixed-rate ISAs are commonly suited to people who have lump sums they want to invest and know they won’t need to access them, which leads us to our next point.
Easy Access Savings Accounts
In contrast, what’s important with these kinds of accounts, is that you can access them as soon as you need the money, explains Metro’s Andy Webb.
Here are four top-paying accounts that anyone can open.
-
Bank: Cahoot
Account: Sunny Day Saver
Rate: 5.00% AER variable for 1 year on balances up to £3,000 -
Bank: Charter Savings Bank
Account: Easy Access
Rate: 3.56% AER with unlimited penalty-free withdrawals with a minimum deposit of £1 -
Bank: Skipton Building Society
Account: Quadruple Access Cash ISA Saver
Rate: 3.90% tax-free pa/AER -
Bank: Yorkshire Building Society
Account: Easy Access Saver Issue 3
Rate: 3.90% and allows unlimited penalty-free withdrawals
Build an emergency fund
This is so important, Prakash emphasises. While some experts say you need at least three months’ worth of living expenses, Prakash says it’s better to be on the safe side and go for six months.
An emergency liquid fund is simple, she says. It protects you from having to sell assets if unexpected expenses arise. Or, if you lose your job or income.
Ultimately, having a financial buffer takes the pressure off, as it means you don’t have to dip into your savings you’ve worked so hard to invest.
Educate yourself on the basics of investing
Prakash says it’s vital people learn about the basics of investing. This includes financial instruments, risk vs. return, diversification, interest rates, and insurance, to name a few.
The expert explains: ‘Complicated products don’t necessarily translate to better returns in the long term. The trick is to understand the business well before investing.’
As Warren Buffett popularly said, ‘Never invest in a business you cannot understand.’
There are so many resources online to give you a better insight into investing.
Platforms like Money Saving Expert have various beginner’s guides, from educating on stocks and shares, pensions and investing, and investment funds.
Trading 212 also has an Investing 101 learning centre that offers to teach the basics of investing to anyone who is considering beginning that part of their financial journey.
Create a budget
‘Having a budget and tracking your cash flow allows you to understand how much you can realistically invest each month,’ says Prakash.
While Prakash says there are apps that can help track budget and expenses, the 50/30/20 rule is also a great tried-and-tested method. This hack can help build your emergency fund, too.
Essentially, the rule involves dividing your spending into three categories: needs, wants and savings. Then, with each paycheck, allocate 50% to needs, 30% for wants and 20% for savings or debt repayments.
Knowing this exact amount each month allows you to invest that 20% without fear of not being able to afford it.
The 50/30/20 rule explained
Needs – 50% of total salary
Needs include essential living costs such as rent or mortgage payments, bills, food and transport to and from work or the school run.
Wants – 30% of total salary
Wants are non-essential costs, such as shopping, eating out, gym memberships, subscriptions, trips away and nights out.
Savings or debt repayments – 20% of total salary
The final 20% of your savings should then go towards paying off debt beyond minimum payments or putting money into a savings account, investment, or pension fund.
Source: HSBC
Check your credit report
Prakash recommends checking your credit report to ‘understand the factors impacting your credit score,’ if there are any. Should you have any errors on your report, for example, it shows an already closed loan, get it corrected.
There are plenty of easy ways to check your credit report online. Experian allows you to check as many times as you want for free, without it affecting your score.
Not only does this give you peace of mind, in terms of knowing whether or not lenders may reject you, but as you improve your score, you’ll have access to better deals, including getting credit at lower rates.
Consider consulting a certified financial planner (CFP)
There’s no shame in needing a bit of hand-holding at the start, says Prakash. If you’d rather have a little guidance before investing and making financial decisions in general, consulting a certified financial planner might be the way forward.
‘They’ll help you build a personalised plan’ in terms of investing, and be able to explain any queries or worries you may have.
If you want more tips and tricks on saving money, as well as chat about cash and alerts on deals and discounts, join our Facebook Group, Money Pot.
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