The UK government is keen to encourage people to invest. If you are thinking of dipping your toe into the stock market, an Isa is often the best way, as it lets you protect any gains from tax. Here’s how to get started.

Consider your goals

Before you open a stocks and shares Isa, think about what the money is for, says Jason Hollands, the managing director at Bestinvest by Evelyn Partners, an investment platform. This type of Isa will only suit you if you have cash that you can afford to put away for a while.

“Is it to provide some money in retirement? Are you starting to get together a deposit to put down on a property?” Hollands says. Your goals will help you work out your time horizon, and “unless you’re prepared to be in it for at least five years, investing in the stock market is possibly a bit too risky”, he says.

While you can cash in your investment when you want to, you should not treat it as a bank account you can just dip into, Hollands says. For money for emergencies, you need a savings account. Get that in place before you think about investing.

If the money is for a house deposit, you should check whether a lifetime Isa is better for you. They can be invested in stocks and shares, too.

Don’t be daunted by choice

Hollands says some people do not invest because they are overwhelmed by the options, but you do not have to make all the decisions.

Most investment companies and banks offer ready-made portfolios. These will typically contain a mix of investment funds, government bonds or exchange traded funds. ETFs are a basket of shares and sometimes bonds, and usually follow the performance of a stock market index such as the FTSE 100.

These portfolios are managed for you and are typically designed to offer different levels of risk. “In most areas of life, the word risk conjures up an image of a bad thing,” says Hollands. “In the world of investing, there is a relationship between risk and reward, and it’s about taking the right amount of risk.”

How much you should take will depend on how long you want to invest for and how much you can tolerate seeing your investment potentially going down in value.

The digital bank Monzo is typical in offering a choice of careful, balanced or adventurous portfolios. Bestinvest has a choice of seven risk levels, with maximum growth offering a step up from its adventurous portfolio. It warns that as the maximum growth portfolio is almost all held in shares, there can be “potentially large short-term fluctuations” in your investment.

Some providers also offer themed portfolios focusing on a specific sector such as technology.

You could choose your own funds. If you are investing £50 a month, you can usually spread it across at least a couple. Or you could start with a tracker fund that follows the FTSE 100 or another big index, so that you are investing in a range of companies without having to choose.

Laura Suter, the director of personal financeat the investment company AJ Bell, says you should make sure you understand what you are buying and why you think it will make money. “You need to make sure you understand how the investment works and all the risks before you commit your money,” she says.

Compare providers

You can get stocks and shares Isas from banks, including many of the new digital ones, and from specialist investment companies.

What is on offer, and how much you will be charged, varies. You will usually be charged for the Isa wrapper, and for the underlying investments.

“The key question when choosing a provider is how hands-on you want to be,” says Molly Pile, a chartered financial adviser at Octopus Money. “Some investors may like to opt for a DIY platform to select their own funds, but this requires time, confidence and a good understanding of diversification.”

For most people – particularly those new to investing – a provider that offers ready-made portfolios will be enough.

Suter says one of the key things to look out for is charges. “The charges you pay on your account or through dealing can have a significant impact over long periods of time, so it’s important to make sure you understand provider charges before opening an account,” she says.

The consumer group Which? publishes a guide to its best-buy providers every year based on customer service and cost. AJ Bell has been one of its recommended providers since 2019, and InvestEngine is another it endorses. Both offer ready-made portfolios; InvestEngine’s are invested in ETFs.

“Don’t just assume that the one offered by your current bank will automatically be the one best suited to your needs,” says Jenny Ross, the Which? Money editor.

“Though fees are an important part of the picture, they’re not the only factor to consider when you’re shopping around. For example, the cheapest option may not necessarily be the right one for you if it doesn’t have the investment range you’re looking for, or if customer service is lacking.”

Get in the habit

Another reason why people put off getting started is that they worry whether the timing is right and the market might be about to crash, says Hollands.

One way to cut through the uncertainty about timing is to invest little and often rather than in a lump sum. “Some months you will be buying when it’s expensive, but if the market dips, you’ll be buying at a cheaper price,” he says.

And it becomes a habit that way, too. Set up a regular payment from your bank account and you do not have to think about it.

If that won’t work for you, some providers will let you pay in ad hoc, so you could sweep money in at the end of the month when you know what you can afford.

If you have a lump sum you want to pay in, instead of buying investments with it straight away, you may want to hold it in the cash account linked to the Isa and phase the money into the stock market.

Start small

With Isas, you can put in up to £20,000 each tax year (cash sa limits will change in April 2027), but most people do not, so don’t be put off if you can only afford a small sum each month.

It is possible to get started with just £1 at providers including Monzo, IG and Trading 212. Many other providers, including AJ Bell, have a minimum investment of £25 a month. Do not just pick based on that – make sure you have access to the investments you want.

Suter says that if you want to start investing little and often, you may find a tracker fund a good option. For example, she says that if you had started investing £25 a month into the FTSE All World Index Acc fund 10 years ago, you would have £5,536 today – having paid in £3,000. If you had started five years ago, you would be sitting on £2,022, having paid in £1,500.

Bear in mind fees and charges: a flat fee will eat into a small investment much more than into a big one, so look for percentage-based charges.

Prepare for ups and downs

At times the stock market falls and your investment may be worth less than you put in. This should not be a problem if you do not need to withdraw the money and crystallise the loss, but it may still be scary to see.

If there are ups, you may have to do a bit of work to rebalance your investments – say, for example, that one fund doubles in value, you may end up with a considerable part of your Isa held in it.

“However carefully you initially planned it out, over time those carefully made allocations will drift,” says Hollands. “What you initially thought would be a medium-risk portfolio will become a high-risk portfolio.”

At this point, you may need to sell some of your stake to reinvest in another fund. Do not withdraw the money from the Isa, unless you need it, but arrange for it to buy another investment within the wrapper.