5 steps for new investors

  • 2. The basics

    Why invest for your future?

    Investing can help you when planning your longer-term financial future. Our products could allow you to:

    • maximise your ISA allowance
    • plan for your retirement
    • make arrangements for your children’s education
    • help reduce the effect of inflation
    • potentially achieve better returns on your money.

    Before deciding whether or not to invest, please ensure you’ve considered the following:

    Emergency cash

    Using a savings account to save enough cash to cover any emergencies. This will help you cover for things like your car breaking down or house repairs. This should typically be at least 3 times your net monthly income.

    Short-term debts

    If you have short-term debts you may pay more in interest than you could earn by investing. You should consider paying any short-term debts off before you choose to invest.

    Are you protected?

    You should consider protecting yourself and your family against unforeseen events. Make sure you and your family have the right amount of cover in the event of illness, accident, death etc, otherwise your finances and your lifestyle could easily be derailed.

    Step 3: Investment Options

  • 3. Your investment options

    There are two main ways of investing:

    • Carry out your own research and invest your money yourself online. We have a number of guides and a range of products to help you through this process.
    • If you feel that you need advice and have savings and investments of at least £100,000, or sole annual income of £100,000 or more you can take advantage of the full range of financial planning solutions that the financial advice service has to offer. A fee will apply for this service.

    Other sources of advice

    You can find more information at the Money Advice Service which offers guidance on a wide range of financial subjects, as well as details of Independent Financial Advisers in your local area.

    Do I need to have a lump sum to be able to invest?

    You can choose to invest a lump sum if you have one, or you can also invest monthly to build up your investment over time. The main benefits of investing regularly are that you can pay for this out of your monthly income and you do not invest into the stock market at one fixed point in time. Because the value of any investment will rise and fall over time, investing the same amount each month can help to smooth out ups and downs in the markets as you’re buying at different prices on a regular basis.

    Step 4: ISAs

  • 4. Making the most of your ISA allowance

    ISAs are a tax-efficient way to save or invest your money and are a great starting point for any savings or investment plans as they’re not subject to personal Income Tax or Capital Gains Tax.

    Cash ISAs

    A savings account that pays tax-free interest, so no matter what rate of income tax you pay you won’t be liable for any income tax on the interest earned. They can be either fixed to provide a known rate of return or variable and open-ended.

    Stocks and Shares ISAs

    These allow you to invest tax-efficiently in stock market linked investments such as shares, funds, bonds etc. While returns can be higher than a cash ISA, there’s always an element of risk associated with investing.

    Innovative Finance ISAs

    Innovative finance ISAs were launched in April 2016 and allow investors to lend via peer-to-peer platforms without paying any tax on the interest earned.

    Lifetime ISA

    Introduced in April 2017 the Lifetime ISA will allow you to use some or all of the money to buy your first home, or keep it until you’re 60. You also receive a government bonus of 25% (up to £1,000) a year.

    How much can I save or invest each year?

    Each year the Government allows you to invest in a tax-efficient product called an ISA, or Individual Savings Account. The maximum amount you can invest in the current tax year is £20,000. You can choose to invest your full allowance into a cash ISA, a stocks and shares ISA, or an innovative finance ISA or any combination of the three.

    Alternatively you can split your allowance by investing up to £4,000 in a Lifetime ISA and the remaining allowance between any combination of the other three types of ISA, as long as you don’t exceed £20,000 in total across your ISAs.

    Tax treatment depends on your individual circumstances and may change.

    Step 5: Ready to invest

  • 5. Ready to invest

    Having reviewed the steps to investing, you may feel ready to invest. Before you go any further, please read the statements below and check that you agree with all of them:

    • You have enough money (typically three months’ net income) in an easy access account to cover any emergencies, such as unexpected car or household repairs, and any major spending you have planned in the next five years.
    • You’re happy to accept some risk on your investment.
    • You’re prepared to invest for the medium to long-term (at least 5-10 years).
    • You don’t have any significant short-term debts, as these are likely to cost you more in interest than the amount of any growth you may achieve on an investment.
    • You’ve carried out your own research and you feel confident in making your own decisions.

    Help and research

1. Investing or Saving

It’s important to set aside money for your future, whether it’s a rainy day fund to cover unexpected events or for longer-term goals.


Investments offer the potential for greater rewards than a savings account but they do involve more risk to your money. Because of this, it’s normally recommended that investments are held for the medium to long-term, which can help to minimise the impact of ups and downs in the stock markets. Money can usually be invested using a lump sum or by a regular monthly amount.

You should consider investing if you want to put some of your money away for the medium to long-term (at least 5 to 10 years), and you’re willing to accept some risk to your cash.

More about investing or saving

Financial planning

Understanding investment risk


It's always a good idea to keep some money to hand for emergencies or to cover any short-term (5 years or less) goals. Savings are likely to start with money held in bank or building society easy access savings accounts where you will be able to make withdrawals when you need to and in return you will earn interest. This is a low-risk way of saving although inflation may reduce the real value of your savings over time.

There are also other savings accounts, such as term deposits, where in return for a higher rate of interest, you may have to lock your money away for a set time or pay a charge on any money you take out during the term.

Savings tend to be best if you don’t want to take any risks with your money, have a short-term goal in mind, and need easy access to some of your money.

Step 2: The basics

Understand the risks

The value of an investment can fall as well as rise, and you may get back less than you invest. If you are not sure about investing, seek independent advice.

Financial advice

You can take advantage of a range of financial advice and planning solutions if you have at least £100,000 of savings and investments or a sole annual income of at least £100,000.

Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628.