At OneFamily, we believe everyone should have the opportunity to invest their money.
But when investing feels complicated, it can be off-putting if you haven’t been taught about finance. This leads to some people, especially young people, being excluded from opportunities to make their money work harder through investing.
What is investing?
Before you start investing your money, it's important to understand what "investing" means.
Investing typically means paying your money into an investment fund along with other investors' money. The investment fund is used to buy various different types of investments: things like shares in companies, property and corporate and government bonds.
Your money increases or decreases as the value of those assets changes. When you want to withdraw your money, you'll "sell" your shares at their current price.
How does investing work?
Many people start investing their money by investing in funds. With this type of investing, you put your money in an investment fund and a fund manager chooses what investments to buy with your, and other investors', money.
Investment funds come in all shapes and sizes. One of the most common ways to start investing is by putting your money in a stocks and shares ISA, where it will be invested in a fund. When investing through a stocks and shares ISA, you can usually choose which fund you want to invest your money in, too.
The investment fund you choose will be used to buy various different types of investments: things like shares in companies, property and corporate and government bonds. Your money increases or decreases as the value of those assets changes.
"Low-risk" or "cautious" funds invest more of your money in safer assets like government or corporate bonds, and less in more risky assets like company shares. On the flip-side, a more risky fund might invest more of your money in company shares.
Typically the more risk you take, the more your money could potentially grow by - but the greater the chance of losing money.
Is investing riskier than putting money in a savings account?
Saving and investing comes with different risks.
With investing, there's a risk of ending up with less money than you've put in. This happens if you withdraw your money at a time when the assets invested in are worth less than they were when you started investing.
For example, as there’s no limit to how much companies can grow, investing in company shares has a higher potential to make you money. But it comes at a risk – companies can shrink as well as grow so you could get back less than you put in, depending on what’s happening with your shares when you sell your investments (ie withdraw your money).
Generally speaking, risk smooths out over time as the ups and downs of the stock market are less significant over longer periods of time. In fact, in every 10-year period since 2000, stocks and shares have out-grown interest rates.*
That's why investing isn't recommended if you plan to withdraw your money within five years.
With a savings account (an account that grows by building interest), there's a risk that your money will grow by less than the cost-of-living goes up by.
How much money you make in this type of account depends on interest rates. You can’t technically lose money, but if inflation (how much things cost) goes up by more than you make in interest you could be losing money in "real terms", which is when the price of the things you want to buy goes up faster than the amount of interest your savings make.
*Source: Barclays GILT study 2023. Past performance is not a reliable indicator of future results.
How can I start investing my money?
At OneFamily, we offer two adult ISAs that invest in stocks and shares on your behalf. That means you don’t need to choose which companies to buy shares in, our fund managers do that for you.
You simply need to choose the investment style that's right for you, depending on the level of risk you're comfortable with.
If you have a child trust fund or junior ISA with us, you’ll be able to easily transfer money into our Stocks and Shares ISA or Lifetime ISA (or a bit in both!) once you turn 18 by logging into your online account.
If you don't have a child trust fund or junior ISA with us, you can open either ISA with a £25 direct debit or a lump sum of £250.
Our Stocks and Shares ISA and Lifetime ISA both invest in stocks and shares. This means the value of your account is likely to go up and down over time. This is normal for this type of investment, but you might therefore get back less than you've paid in if you withdraw at a time when the value is lower.
