Investing can be an effective way to build wealth in the long term.

But it’s not always easy getting started. Many people may never have been taught about investing at all, leaving them understandably confused as to how it works and what they could be doing to grow their money.

In fact, research by Aviva found that, of the 55% of Brits who don’t invest, a third say it’s because they don’t know enough about it.

Investing can feel overwhelming when you’re new to it. Even experienced investors can find the various options and strategic considerations confusing. But by understanding the basics, you can gain the confidence you need to build your investment portfolio.

Whether you’re looking to start investing for the first time or want to understand more about your investment options, here are four tips you should know.

1.    Consider the various options for investment categories

Often, when people think about investing, they think of the stock market. But there are many different asset classes to choose from, including:

  • Stocks and shares: Ownership of a small piece of a company listed on the stock market. These are sometimes referred to as “equities”.
  • Funds: Collections of a diverse range of investments. Money from many investors is pooled together into a scheme managed by professionals.
  • Bonds: Loans made to corporations in return for a fixed income via interest payments. Investors typically receive their full capital back at maturity.
  • Gilts: Loans to HM Treasury. These work similarly to bonds, with returns delivered via interest payments until the capital is returned at maturity.
  • Property: Ownership of real estate, with a view to turning a profit through rental income, capital appreciation, or both.
  • Commodities: Purchasing raw materials such as gold or oil, or using financial derivatives such as equities.

It’s important to carefully consider each asset class to select the ones most suited to your risk appetite and investment goals. Usually, an investor will hold multiple asset classes within their portfolio.

2.    Diversify your investments across multiple asset classes, geographies, and risk profiles

When investing, it’s important to understand that the value of your investments can go down as well as up. There’s no guarantee that you’ll get back the money you paid in – in fact, you could end up making a loss.

A common strategy to mitigate this risk is to invest in a diverse portfolio of assets. This can lessen your vulnerability to sudden market changes by reducing the likelihood of all your investments taking a downswing simultaneously.

As such, you might wish to spread your investments across multiple asset classes (as described above), sectors, and geographical regions. You may also consider the risk profile of each investment and aim to have a mixture of high- and low-risk assets.

In doing so, you can avoid all your investments being exposed to the same market forces, helping to balance low-performing assets against high-performing ones to achieve sustained growth.

3.    Invest for the long term for a greater chance of positive returns

When you’re investing in stocks and shares, the value of your investments is likely to fluctuate constantly. Take a look at the FTSE 100 – an index of 100 of the largest companies listed on the London Stock Exchange – and you’ll see share prices rise and fall throughout the day.

However, the markets have historically trended upwards over time. The FTSE 100 index has recovered from even its most significant downswings, consistently going on to reach record highs.

Indeed, the index fell by 34.93% at the start of 2020, but recovered to pre-pandemic levels within two years. At the start of 2026, values were over 31% higher than at the end of 2019.

While previous trends are not a guarantee of future performance, history suggests staying invested for a prolonged period could increase your chances of achieving a positive return.

As such, it’s often wise to plan to hold your investments for the long term. This is particularly important to remember during a downswing. When the markets fall, some investors may panic and sell their shares – thereby locking in a loss.

4.     Use ISAs and pensions to invest tax-efficiently

In some cases, your investment returns may be liable for Income Tax, Dividend Tax, or Capital Gains Tax (CGT).

However, Individual Savings Accounts (ISAs) and pensions can allow you to grow your investments tax-efficiently.

ISAs

With a Stocks and Shares ISA, you can generally invest up to £20,000 a year without being taxed on your returns, as of 2026/27. Likewise, you could use an Innovative Finance ISA to invest tax-efficiently in less liquid assets, such as peer-to-peer loans or debt securities.

Your £20,000 tax-efficient allowance is shared across all adult ISAs and renews at the start of the new tax year on 6 April.

Pensions

Funds held in a pension are typically invested and grow tax-efficiently through investment returns.

  • Returns are exempt from tax when held within your pension.
  • When you draw down your pension in retirement, funds are subject to Income Tax (except for your 25% tax-free lump sum).

Not only does this help mitigate your tax bill, but the tax-efficient wrapper can boost your returns to accelerate your pot’s growth.

Returns accrued in a pension are generally reinvested, leading to compound returns. Because your fund isn’t taxed until you draw down, more money is invested within your pension to boost your pot’s growth.

It’s important to consider your timelines for investing. If you don’t expect to need the funds until you retire, a pension could be a useful tool for growing your investments tax-efficiently. However, since you generally can’t access your pension until 55 (or 57 from April 2028), an ISA might be a more appropriate choice if you expect to need the funds sooner.

Get in touch

At Dodd Wealthcare, we can help you curate an investment portfolio and strategy suited to your preferences and goals. With our expertise, we could help you gain confidence with investing so you can start building wealth for the future.

Email info@doddwealthcare.co.uk or call 01228 530913 / 01768 864466 to learn more about how we can help.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.