Getting startedBeginner5 min read

This content is for general education. It does not take your personal circumstances into account and is not a personal recommendation or investment advice.

What is investing?

This article explains what investing is at a basic level, the kinds of assets people usually invest in, and why investing is usually linked to longer-term goals. It is a first-principles guide, not a comparison with cash savings and not a recommendation to invest.

3 key takeaways

Investing means putting money into assets like shares, bonds, or funds that could grow in value or pay income over time.

The value of investments can fall as well as rise, so you might get back less than you put in. Returns are not guaranteed.

Compared with cash savings, investing usually involves more risk of loss, but also the potential for higher returns.

The basics

means putting money into assets like shares, bonds, or funds that could grow in value or pay income over time.

Typical investments include shares, bonds, and pooled funds that hold many investments in one place.

The value of investments can fall as well as rise, so you might get back less than you put in. Returns are not guaranteed.

Compared with cash savings,

usually involves more

of loss, but also the potential for higher returns.

People often use

for longer-term goals because values can move up and down in the short term.

This article explains the basic idea of

. If you want a closer comparison with cash savings, read the separate article on cash vs investing.

Illustrative example

A simple example of investing

Imagine someone puts money into a fund that holds a mix of company shares and bonds. Over time, the value of that fund may rise or fall, and it may also produce some income. That person is investing because their money is now tied to assets whose value can change over time, rather than sitting as cash in a savings account.

Common misconceptions

Myth

Investing only means picking individual shares.

Reality

Typical investments include shares, bonds, and pooled funds that hold many investments in one place. It is not limited to buying individual company shares.

Myth

If I invest for the long term, I cannot lose money.

Reality

People often use investing for longer-term goals because values can move up and down in the short term, but returns are not guaranteed and losses are still possible.

Myth

Investing is automatically better than saving.

Reality

Compared with cash savings, investing usually involves more risk of loss, but also the potential for higher returns. Neither is automatically better in every situation.

Test your understanding

Are these statements true or false? Tap to reveal the answer.

“Investing only means picking individual shares.”

“If I invest for the long term, I cannot lose money.”

“Investing is automatically better than saving.”

Sources

FCA - Advantages of mainstream investments FCA - Golden rules of investing FCA - Risk and returns

What is investing?

3 key takeaways

Investing means putting money into assets like shares, bonds, or funds that could grow in value or pay income over time.

The value of investments can fall as well as rise, so you might get back less than you put in. Returns are not guaranteed.

Compared with cash savings, investing usually involves more risk of loss, but also the potential for higher returns.

The basics

means putting money into assets like shares, bonds, or funds that could grow in value or pay income over time.

Typical investments include shares, bonds, and pooled funds that hold many investments in one place.

The value of investments can fall as well as rise, so you might get back less than you put in. Returns are not guaranteed.

Compared with cash savings,

usually involves more

of loss, but also the potential for higher returns.

People often use

for longer-term goals because values can move up and down in the short term.

This article explains the basic idea of

. If you want a closer comparison with cash savings, read the separate article on cash vs investing.

Illustrative example

A simple example of investing

Common misconceptions

Myth

Investing only means picking individual shares.

Reality

Typical investments include shares, bonds, and pooled funds that hold many investments in one place. It is not limited to buying individual company shares.

Myth

If I invest for the long term, I cannot lose money.

Reality

People often use investing for longer-term goals because values can move up and down in the short term, but returns are not guaranteed and losses are still possible.

Myth

Investing is automatically better than saving.

Reality

Compared with cash savings, investing usually involves more risk of loss, but also the potential for higher returns. Neither is automatically better in every situation.

Test your understanding

Are these statements true or false? Tap to reveal the answer.

“Investing only means picking individual shares.”

“If I invest for the long term, I cannot lose money.”

“Investing is automatically better than saving.”

Sources

FCA - Advantages of mainstream investments FCA - Golden rules of investing FCA - Risk and returns