How to make your first investment in the stock market
It’s easy with our step-by-step guide.
People are often nervous about investing in the stock market, or don’t know where to start.
This step-by-step guide will make it easy. It is intended for first-time investors who know that they want to take the leap into stock market investing but simply don’t know where to begin.
Follow these steps, and you will be well on the way to improving your financial outlook. There are two essential caveats. First, you must be happy to commit your money for five years, preferably ten years or longer. Over these long periods, the stock market is very likely to help your money grow more than it would if you keep it in cash.
And don’t worry. If you change your mind and want to cancel or change your investment choice, you can do so with very little hassle or expense – although you need to be aware that the value of your investment can fluctuate from day one.
" The average investment trust provided better returns than savings accounts in 67% of one-year periods, 84% of three-year periods, 95% of five-year periods and 100% of ten-year periods. "
On the way to improving your financial future
At the end of this process, which takes about 30 minutes, you will have your first investment trust, a diversified portfolio of stocks and shares, with an expert manager and board of directors in charge of safeguarding and growing your money.
You will then join the millions of ordinary people who have chosen to trust the stock market with their long-term savings, and have seen their wealth grow over the long term.
The average investment trust provided better returns than savings accounts in 67% of one-year periods, 84% of three-year periods, 95% of five-year periods and 100% of ten-year periods.
In short, the odds are stacked heavily in your favour, especially if you have a long timeframe.
So, let’s get going.
We’re going to guide you through opening an account with a fund platform. A fund platform is effectively an online ‘shop’ where you can choose different types of investments – and where you can select your first investment trust.
Then you can sit back, relax, and let the expert manager and board of directors take care of your investment.
Remember, there is very little to worry about in this process. As long as you have a long enough timeframe and have some easy access cash in reserve to cover any emergencies, the stock market is a good home for your money. As you can see from the statistics above, there is an overwhelming probability that your investment trust will significantly outperform cash savings.
Step one
Open an account with an investment platform.
There are several to choose from, including big names like AJ Bell, Hargreaves Lansdown and interactive investor. You can find a list of major platforms here.
If you already have a cash ISA open for this year, you can still open a stocks and shares ISA on one of these platforms, but you will need to make sure that the amount you invest doesn’t take you over the £20,000 annual ISA limit.
The £20,000 annual ISA allowance covers both cash ISAs and stocks and shares ISAs. If you are in any doubt, call your ISA provider and check how much of your allowance you have left to invest in stocks and shares.
To open your investment account or ISA you will typically need:
- Your National Insurance number – you'll find this on your National Insurance card, a benefit letter, payslip or P60.
- Your bank or building society account details.
- Your debit card details – so you can put cash in your ISA.
- Email and phone number.
Step two
Put money in your account
You can do this by bank transfer or with a debit card for one-off, lump sum payments. Or you can set up a direct debit for regular payments.
Step three
Choose your investment trust to go inside your ISA or in your general investment account
To help choose your first investment trust, the AIC asked a range of financial experts for their recommendations for first-time investors.
Their top tips for first-time investors were:
- City of London Investment Trust
- F&C Investment Trust
- Murray International Trust
- Alliance Witan
- Brunner Investment Trust
- Personal Assets Trust
- Capital Gearing Trust
Bear in mind that the last two trusts on the list, Personal Assets Trust and Capital Gearing Trust, are predominantly wealth preservation trusts. In other words, they focus on preserving the value of your capital and keeping up with inflation, and as such are the least risky trusts on the list.
The other recommended trusts may go up and down in value more, but will generally produce greater returns over time.
Performance data for each of the recommended trusts data is shown in the table below. This is the return you would have made for every £100 invested. So for example, if you had invested £100 in City of London Investment Trust one year ago, it would have grown to £124.
| Investment trust | 1 year return on £100 | 3 year return on £100 | 5 year return on £100 | 10 year return on £100 |
|---|---|---|---|---|
| City of London Investment Trust | 124 | 150 | 180 | 232 |
| F&C Investment Trust | 113 | 138 | 162 | 324 |
| Murray International Trust | 134 | 144 | 175 | 300 |
| Alliance Witan | 105 | 131 | 144 | 293 |
| Brunner Investment Trust | 109 | 136 | 168 | 340 |
| Personal Assets Trust | 106 | 115 | 125 | 164 |
| Capital Gearing Trust | 106 | 111 | 114 | 162 |
Source: theaic.co.uk / Morningstar (as at 31/03/26).
Step four
Relax!
Congratulations, you have made your first investment. Because investment trusts are professionally managed, you can sit back and let the investment trust manager do the hard work of deciding where exactly to invest your money.
" Try not to obsess over the value of your investment every day. Remember, this is a commitment that you have made for several years. "
Keeping an eye on your investment
Once you have opened your account, you can download an app for your phone and keep an eye on your investment.
A word of advice. However tempting it may be, try not to obsess over the value of your investment every day. Remember, this is a commitment that you have made for several years, so don’t worry about short-term fluctuations. Even if the value falls for months at a time, over the five or ten year timeframes we mentioned above, your investment will almost certainly do better than cash. So try to treat it like your workplace pension (if you have one), which you probably don’t pay much attention to! Your pension is doing a very similar thing, investing in the stock market to maximise returns over the long term.
Good luck. And remember, you can always visit the AIC website to keep up with the latest news and developments.
Nick Gardner
Nick Gardner is an award-winning financial journalist. He is former Business and Personal Finance Editor of the Sunday and Daily Telegraph in Sydney, and Deputy Money editor of The Sunday Times in London. He was also Head of Content at Brewin Dolphin, the wealth manager.
