• Understand why you may want to consider investing.
  • Understand what you can invest in, and how.
  • Understand the key things you need to consider before you decide to start investing.
  • Find out ways you can invest responsibly.

Read time

13 mins

Chapter 1

Chapter 1


Read time

2 mins

The interest that is received as a result of paying in to a savings account is a way in which people can look to grow savings. Interest is where your bank or building society pays money into the account because you choose to save with them.

With interest rates at record lows, your savings will be secure but won’t rise as much as they would with higher interest rates. It’s also difficult to make sure the buying power of your savings doesn’t decrease due to inflation. In its most basic sense, inflation means that £100 buys you less this year than last year because prices have gone up.

To help your savings grow so they keep in line with inflation – or grow faster than inflation – you can consider taking on more risk to benefit from the potential growth. You can take this risk by investing your money in stocks and shares, or in other investments.

Investing lets you put your money into things like shares, which means you own a small share of a company, or other investment options. The assets you own may increase in value if, for example, a company you have invested in may perform well on the stock market – so the original amount you invested will grow too.

Of course, it’s important to remember your investments could perform badly or may be impacted by a dip in the wider economy. The price of your assets can fall, and so can the value of your savings, meaning you may get less back than you originally paid.

If you are uncomfortable with the level of risk associated to investing, it’s a good idea to research savings accounts to check if there is an account available that may suit your needs. There are comparison websites that can you help you compare providers.

The rest of this section will help you understand investment options, ways to invest , market volatility and risk – and whether you’re ready to start investing. If you are considering your investment options, it’s important to think carefully before making any commitments. We always recommend speaking to a financial adviser, especially if you’re considering a larger amount of money. You will usually be charged for any advice you receive.

Chapter 2

Chapter 2


Read time

3 mins

It is important to remember that all investments come with some risk. The value of assets (the things you own) can fall as well as rise and you may get back less than you originally invested.


How to own part of a company

To own part of a company, you need to buy something called a ‘share’ (also sometimes called a stock or equity). When you buy a share, you buy a small slice of a company. Shares usually get traded throughout the day on something called a stock exchange and the price of stocks move up and down continuously during the day. The price of a share depends on the supply and demand of that particular share, this is based on lots of factors such as performance of the company, and other external factors including news flow.


How to own multiple investments in a simpler way

Rather than manually investing in lots of shares in lots of different companies, you can invest in something called a ‘fund’. Funds are collective investments managed by professional fund managers which can hold a range of assets types, not just shares. Your money is put with the money of other investors and invested on your behalf.

The whole fund is then split into multiple slices, called units. Fund unit prices are based on the performance of the assets that the fund is invested in.

Prices are set daily, so they don’t change during the day like shares. The number of units you own depends on how much you invested and the price of the fund’s units on the day you invested.

Funds are either actively or passively managed. In an actively managed fund, the fund manager manages the investments in the fund closely and makes decisions to buy and sell investments to help the fund perform to its targets. When a fund is passively managed, a fund manager follows strict guidelines to duplicate the performance of a certain index (a set of investments listed on a stock exchange), market or commodity rather than try to outperform it. Generally passive funds will be a lower charged investment.

Another type of collective investment is an investment trust. An investment trust is similar to a fund, but investment trusts are treated like companies listed on a stock exchange. This means when you want to invest in an investment trust, you need to buy shares in it. Like in a fund, the price of a share in an investment trust depends on the performance of the shares and other assets that the fund is invested in.

It also depends on the supply and demand of the shares themselves and will be more susceptible to other factors in the market, caused by for example geopolitical concerns. This means it can be a riskier option than a fund.


How to get interest with potentially less risk from your investments

Two investment options for assets that can return interest and are generally more stable than shares are Government bonds also known as gilts and corporate bonds. These investments are issued by Governments or companies when they need to raise money, for example to finance a new development. As an Investor, you lend money, and agree the government or company can hold this money for an agreed period of time. You will then receive a fixed rate of interest in return (known as the coupon) each year until the term or maturity of the bond is reached and the initial loan is then returned. These assets generally offer low growth, and returns linked to bonds will be related to confidence in the issuer of the bond.


How to gain from potential growth in value of properties or income from rents

You do not need to buy properties to be able to invest in them. There are many funds that invest in commercial and residential property assets with the aim of gaining a return from the rent paid by tenants, and through capital value appreciation as the property rises in value.

Chapter 3

Chapter 3


Read time

2 mins

When you begin investing, you have a choice in which style of investor you’d like to be:

  • Investor for income: If you hold stocks and shares, some give out payments linked to company performance. These are called dividends. On the other hand, bonds pay out interest (like a savings account) over a period of time. You can use these dividends or interest payments as a source of income.

An example of investing for income are people in retirement who use their dividends or interest payments to top up what they receive from the state pension.

  • Investor for growth: Growth investors want to add to the value of their investment – this is known as capital gain. Companies may look to reinvest in the business rather than paying out profits by way of dividends. An example would be technology companies, these are relatively new companies growing quickly, whereas dividend paying companies are generally more mature industries such as banking and utilities.

You can be a mixture of both types of investor, or change style over time depending on your circumstances.

Its important to remember with any investment approach you may get back less than you invest. If you’re not sure about investing, seek financial advice. You may get charged for any advice you receive. Tax treatment depends on individual circumstances and may be subject to change in the future.

Chapter 4

Chapter 4


Read time

2 mins

Your attitude to risk

Your appetite for risk of losses depends on a lot of factors. These include:

  • How long you plan to invest
  • Your age
  • Your health
  • Your income level
  • Your investment goals
  • The source of your funds
  • How much of your total assets are invested

To reduce risk and volatility, try to diversify your investments by holding a range of different asset types. Having all your assets as stocks and shares in UK companies means you’re at risk of a bigger fall in value if the UK economy crashes. However, if you hold a variety of assets such as bonds or property from selection of countries or markets, you’ll potentially be able to offset the losses experienced by some assets. This is because certain events can have a different impact across different markets and assets.


Types of risk

To get your savings to grow more than a normal savings account, you’ll probably want to achieve a return that’s higher than inflation. If you’re considering investing, it’s important to think about the level of risk you're comfortable with.

As a general rule of thumb, more risk means greater potential rewards. However, this isn’t guaranteed – you can always end up with less than you originally invested.

Different types of risk that affect investments include:

  • Changing interest rates
  • Changes in inflation rate
  • Market falls
  • Poor fund manager performance

If you are concerned about changes in the market price of investments watch our films which explain stock market volatility.

Chapter 5

Chapter 5


Read time

2 mins

Whether you invest in shares or funds, your money could have an impact on environmental and social issues. There are a range of ways to align your investments with your personal views and consider the wider impacts of your investment portfolio.

If you invest in funds or ETFs, the way the fund invests will be reported. You can find out what proportion of the fund is invested in a certain industry and look at what the top company or asset holdings are.

There are many funds which focus on sustainability and social outcomes. Whichever share dealing platform you decide to use, you’re likely to be able to find sustainable options to invest in.

When investing in specific companies by purchasing stocks and shares, its useful to do is some research so you understand the company’s stance on issues that matter to you, if sustainability issues are important to you.

It’s important to remember that investing in government bonds may mean your investments aren’t aligned to your preferences. For example, a government may be increasing spending on mining for fossil fuels or supporting the production of advanced weaponry.

Watch our video on environmental impact investing to understand the investment strategies you can use to invest in a more sustainable way, and the principles we use in our environmental fund approach. We also offer more information about investing responsibly on our website.

As with all investments you may get back less than you invest. If you’re not sure about investing, seek financial advice. You may get charged for any advice you receive. Tax treatment depends on individual circumstances and may be subject to change in the future.

Scottish Widows Be Money Well is committed to providing information in a way that is accessible and useful for our users. This information, however, is not in any way intended to amount to authority or advice on which reliance should be placed. You should seek professional advice as appropriate and required. Any sites, products or services named in this module are just examples of what's available. Scottish Widows does not endorse the services they provide. The information in this module was last updated on 28th Jul 2022.


What is stock market volatility?

What is life insurance?