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How to start investing

Some things are hard to start. Old cars, or writing articles, for example. But it might not be as hard to start investing as you’d think.

And you may not need as much money as you’d think either. If you’ve got your finances in shape and your head around the basics of investing, this simple guide shows you how to get started.

How much do you need to start investing?

As you may have figured out by now, the answer is: not much. If you bank with HSBC, you can start investing with as little as £50 per month or a £50 lump sum.

While a £50 investment is a nice gentle way to start, you may want to invest more than that if you have it. Because the more you contribute to your investment fund, the higher your potential earnings in the long run.

The key thing is to make sure you’ve got some money saved up in reserve before you start investing. We recommend having an emergency fund, held in a separate, easy-access account, to cover 3 to 6 months of expenses.

Remember, when you invest money, you’re putting it at risk. Which means you could get back less than you invest. Your money could potentially grow too of course – that’s why people do it – but there is that risk you could lose money.

So an emergency fund can give you peace of mind that you’d have money available, without needing to dip into your investment fund, if you needed to cover an unexpected cost.

Can you access your money if you need to?

Big things in life can, and do, happen out of the blue. We understand that. With any HSBC investment, you have peace of mind knowing that you can access your money quickly if you need to – usually within 5 days of selling your funds or shares. However, this will impact the overall performance of your investment.

That’s why we say that investing is for the long term – 5 years, at least. When you’ve time on your side, there’s no need to panic if your investment falls in value at times. That’s all part and parcel of investing.

The longer you leave your money invested, the more time it has to potentially grow and recover from setbacks. 

Can you invest in an ISA?

Yes, a common way to start investing is via a stocks & shares ISA. This is because you won’t pay any UK income tax or capital gains tax on the returns you receive.

Whether you choose funds or shares – or you pay for some advice to help you decide – you can hold your investments in a stocks & shares ISA to shield them from tax.

As with all things tax-related, bear in mind that the value of the benefits to you will depend on your circumstances, and that tax rules could change in the future.

How do you choose what to invest in?

As we’ve covered in investing for beginners, there’s no shortage of options. But there’s also no need to be overwhelmed.
If you don’t feel equipped to choose your own shares – and let’s face it, most of us don’t - there are lots of ready-made alternatives.

For example, based on how long you can afford to leave your money invested and how much risk you’re prepared to take, you may want to choose a ready-made portfolio of investments.

If you chose this option, your money would be invested in funds made up of a wide range of investments, including shares and government bonds. Your investment would then be managed on your behalf.

And if you’re not sure how much risk is right for you, we can recommend a portfolio for you through our online advice service. Fees only apply if you follow our recommendation.

Are you clear on the costs?

Speaking of fees, there will be costs involved whichever way you decide to invest. Here are some of the more common types you'll come across:

  • trading or transaction fee: if you're investing in shares, you normally pay a fee every time you buy or sell them.

  • account or platform fee: the cost a provider will charge to look after your funds or shares, giving you access to the tools and resources on their investment platform.

  • ongoing charge: if you're investing in funds, this can be a useful comparison tool as it gives you a breakdown of the charges that are deducted directly from the fund, including the fund managers' annual management charge and other expenses.

  • advice fee: this is the cost of receiving a personalised recommendation based on your circumstances. Of course, if you choose your own investments you won't pay any advice fee.

Costs will be clearly signposted by the investment provider in the relevant product documents before you apply. It’s important to read these carefully before you invest – and to factor the fees in, as they will impact your overall returns.

So, how do you actually start investing?

It’s simple to start investing with HSBC. You just need to be a current account customer, a UK resident and over 18 years old.

We’ve designed these 3 options especially for people like you to help you start investing:

Choose your own ready-made portfolio

For a quick and easy way to start investing, you could choose an HSBC ready-made portfolio. All you need to do is choose your preferred level of risk and we’ll take care of the rest. Start investing with a lump sum of £50.

Choose a sustainable portfolio

If you want to invest in companies that are striving to make the world a better place, you can choose one of HSBC's sustainable portfolios. Again, you just choose your preferred level of risk and we’ll take care of the rest. And you can start investing with a lump sum of £50.

Get investment advice

If you’re not sure which level of risk is right for you, we can give you personalised online advice. Answer a series of questions and we’ll recommend an HSBC fund that matches your needs. You can start with as little as £50 per month – and you’ll only pay a fee if you follow our advice.

Looking for more choice?

If you’d like to cast your net wider, we have 2 more options for you to consider:

Access our entire range of funds

If you like doing your own research, our Global Investment Centre puts a wide range of funds at your fingertips. As well as multi-asset funds, this online fund platform features index trackers and single-asset funds -from other leading fund managers as well as HSBC. Start with a lump sum of £50, or set up regular investments from £50 per month.

Pick your own shares

If you know what individual shares you’re interested in, our online sharedealing service could be for you. InvestDirect lets you research companies and set up share price alerts. You can even create a virtual portfolio so you can test your ideas before you invest. No minimum investment.

Takeaway tips on how to start investing

  1. Save up an emergency fund of 3 to 6-months’ worth of living costs before you invest.

  2. Be prepared not to touch your investment for at least 5 years.

  3. Think about starting small and setting up regular contributions.

  4. Use your ISA allowance when you invest to protect more of your money from tax.

  5. Consider taking advice to help you decide what’s right for you.