Pensions, investments and savings

This video is for educational purposes only. This should not be viewed as advice or a recommendation to invest.

Investing can sound intimidating. What if it's actually simpler than it seems? You may already be an investor without realising it. Today we'll look at a few common investment products, maybe even some you're currently using, and show you why you've already got what it takes to be an investor.

The Investing Master Plan

Episode 2: Building your investment strategy

Hello and welcome to Episode 2 of The Investing Master Plan. I'm Alistair McQueen.

In episode 1 we got to grips with the fundamentals of investing. Now it's time to dig a bit deeper into more of the practice. In this episode we'll begin taking those first exciting steps into investing.

We'll help you understand some of the main types of investment products, and how much you might want to invest in each. We'll also look at how to build and maintain an investment portfolio, and finally we'll explore the different things you can invest in. With over 20 years in financial services, I'm here to help you build smart, steady habits that could get your money working harder for you.

Chapter 1:

Ways to invest and types of products

Let's start by taking a closer look at some of the investment products that can hold your money, and how each might suit your goals. There are many products you could consider, and so to keep things simple in this short video I'll focus on three of the most common products. Stocks and Shares ISA's, pensions, and general investment accounts.

The value of an investment may go down as well as up and you could get back less than invested.

We'll begin with the Stocks and Shares ISA, or the Individual Savings Account. One of the most popular investment products in the UK. You can invest up to £20,000 each year into an ISA in total, and the best part, any growth in an ISA is completely tax-free.

Tax benefits are based on personal circumstances and are subject to change. Correct as of October 2025.

Then you've got pensions. In simple terms, if you're employed you can probably choose to invest in a workplace pension provided by your employer. This usually includes employer contributions too.

If you're self-employed or seeking an additional pension beyond your workplace pension, you can also consider a personal pension, often called a self-invested personal pension, or a SIPP.

The principles underpinning all pensions are pretty much the same. They're designed for longer term growth, so they're a powerful way to invest for your longer-term future. And as with ISAs, pensions carry tax advantages, such as tax relief on your pension contributions.

As with ISAs there's a limit on how much you can invest in pensions, and this is currently up to a maximum of £60,000 per tax year.

Tax benefits are based on personal circumstances and are subject to change. Correct as of October 2025.

A general investment account, as its name suggests, is an investment product that gives you general access to a wide range of underlying investments. Unlike ISAs and pensions however, there are no tax perks. But the upside there is no limit to how much you can invest in this general investment account. This flexibility can be handy for example, if you've maximised your ISA or pension allowances, or if you wanted to use wider investment options.

Given the goals we explored in episode 1, have a think about which product best aligns with your investment objectives, your timeframes, your risk tolerance, and your tax situation.

Chapter 2:

How much should you invest?

The value of an investment may go down as well as up and you could get back less than invested.

Knowing how much you can invest can feel like a bit of a roadblock. So, let's clear up just how much, and how little, you can invest to get yourself started. When it comes to investing there's honestly no right or wrong amount, it's all about what works for you. The golden rule? Only invest what you can genuinely afford.

You might think that investing is for others, perhaps just those wearing pinstripe suits working in the city of London, or on Wall Street in New York, or you need a big lump sum to get going. Today these preconceptions are far from the truth. Millions of people in the UK are investors. You may not appreciate it, but if, for example, you've a workplace pension, you're probably an investor already. In short, being an investor need not be as scary or as alien as it might at first seem.

Starting early can make a big difference, because time is one of your biggest superpowers when it comes to investing. But before you dive in, there are two important steps many should consider. First, it often makes sense to consider clearing any high-cost debts like credit cards or personal loans.

Two, it often is good practice to make sure you build up a rainy day fund, ideally about three months worth of expenses, potentially in an easy access savings account. Once that's in place, it's time to think about what you're investing for — perhaps a home, perhaps retirement, perhaps something else.

Next, consider how you want to contribute. Some people prefer a one-off lump sum, but others like the little and often approach. Even something like £100 a month can really build up over time. You'll also need to think about how long you want to invest for it, and how much risk you're comfortable with taking. If your goal is short-term, you'll likely want to take less risk, but if you're investing for the long term, you've got more time to ride out the ups and downs.

And finally, do you want to do it yourself or have your investments managed for you? Some investors like picking their own investments, while others prefer the simplicity of something like a ready-made fund, where your investments are chosen for you.

Here's a little challenge you could try later. Grab a scrap of paper and ask yourself three questions. What's my monthly income? What are my monthly essentials? And what's left over? Then ask yourself, what's the realistic amount I could invest each month without impacting on my day-to-day? Even if it's a small number, seeing it written down can help make your next steps a lot clearer.

Chapter 3:

How to build and maintain an investment portfolio

The value of your investments can go down as well as up, and you may get back less than invested.

Once you've started investing, the next step is learning how to build and maintain your portfolio. And that's where a few smart actions can really pay off. An investment portfolio is a collection of various financial assets that you've invested in, such as stocks, bonds, commodities and cash, working together to help you meet your financial goals.

Let's start with something that can make a huge difference over time: tax efficiency.

Tax benefits are based on personal circumstances and are subject to change. This simply means choosing investments that can help you minimise the tax you pay. This is not tax evasion — this is taking advantage of the tax rules that are designed to encourage you to invest for your future. Maximising these advantages can really make a difference.

ISAs are a popular place to start. Investments in ISAs pay no income tax, no dividend tax, no capital gains tax. And you've got a few different options to choose from. Each one gives your money that tax-free badge of honour.

Then there are pensions. These are like your long-term growth engines. The money you put in benefits from tax relief, grows tax-free, and if you're in a workplace pension, your employer might even top it up too. You can also take up to a quarter of your pension investment tax-free also. The only catch is that you can't access your pension until a certain age. That age is currently 55.

Rising to age 57 in April 2028.

So it's one to think of as a pot for your future.

Next up, diversification. Essentially, don't put all your eggs in one basket. It means spreading your money across different underlying investments. That way, if one area has a wobble, it doesn't bring everything down with it, giving your portfolio a better shot at steady growth over time.

Then think about product usage. This is about putting your investments in the right type of account to make the most of those tax allowances. For example, you can invest up to £20,000 each year into a stocks and shares ISA. Then, with pensions, the tax allowance can go up to £60,000 a year.

But that amount usually only applies if you earn around that much or more. So depending on your income, that can mean up to £80,000 of potential tax-efficient investing each tax year. As time goes on, it's important to regularly review and rebalance your portfolio.

Tax benefits are based on personal circumstances and are subject to change. Correct as of October 2025.

That just means checking how your investments are doing and making small adjustments if needed. Over time, some investments will grow faster than others and that can shift your overall risk level. By checking in now and then and rebalancing maybe once or twice a year, you can keep your portfolio aligned with the goals and risk tolerance and make sure it stays as tax-efficient as possible.

Finally, don't overlook the value of professional advice. If your portfolio is getting larger, a qualified financial adviser could help you plan more strategically. They'll guide you through tax implications, fees, and help you choose the most suitable product for your situation.

Chapter 4:

What can you invest in?

Now you have a better understanding of some of the products, it might help to get a better understanding about what your money could be invested in. Funds are a great way to start because they give you a chance to spread your money across multiple types of investments rather than putting all your eggs in one basket. By mixing things up, if one investment dips in value, another might rise and help balance things out.

To really see how funds work, it helps to understand the asset classes that make them up. Most investments fall into a few main categories called asset classes. An asset class is just the type of investment your money goes into, to try and make a return - essentially a home for your money. Some of the most common asset classes include cash, bond, equities, and property. Each has its own purpose and its own appeal. And when investing, you might want to consider a one, or a mix of these different asset classes.

Let's take each in turn. The first example of an asset class we'll explore is called cash. It might seem obvious, but it's worth taking a moment just to understand. Think of it as investing your money in a bank account. In practise, when you see an asset class labelled as cash, it may include a range of bank accounts, yes from the UK and perhaps from abroad, or similar low-risk options. The benefits of cash is that it should be pretty stable. The drawback is that for this ability, the return may be lower. And if those returns don't keep up with inflation, the real value of your money could fall over time. That's why cash is often thought of as a short-term home for investments. It may be not so good for longer-term growth.

Bonds, or sometimes called fixed interest, are another type of asset class. Think of it like this. If a friend borrows ten pounds from you and promises to pay it back in a year, plus a little bit extra as thanks, that's basically what a bond does. Instead of a friend, you're lending your money to a company or maybe a government. You don't have to hold on to the bond until it's paid back though. You could sell it to another investor before the redemption date. This does come with some risks. For instance, what you sell it for might be less than what you originally paid. In return for your loan, bonds pay an interest over time, a known rate, and promise to return your money a set date called the redemption date. Now this predictability makes bonds appealing if you like stability. There are still however some risks. The company or the government you've lent the money to might miss interest payments, or in the worst case, default completely. That could mean losing some or even all of your investment. The value of your bonds can go down as well as up, so you could get back less than you invested if you choose to sell before that set redemption date. Now bonds are a great place for stability, but not the best if you're looking for long-term growth. Compared with cash, bonds carry a little more ups and downs, but that extra movement can come with the potential for a bit more reward.

Third up it's equities, or also sometimes known as company shares. This asset class may be what people think of when they think of investing. They give you, the shareholder, a stake in the ownership of a company, and if the company makes a profit, you may get a payout called a dividend. Shares are issued by companies around the world and traded on exchanges such as the London Stock Exchange. The total value of all the shares issued by a company is known as its market capitalisation. In other words, how much it is worth in total. The attraction of equity is that when the company does well, your investment does well too. It's a bit like owning a small slice of a restaurant. If the restaurant is busy and making good profits, you benefit and you might even get a share of those company profits. Over time, if the restaurant grows and becomes more valuable, so does your slice. That's why with a fair wind, equities have the potential to deliver stronger long-term returns than savings. You have the capability to keep up with inflation and sometimes even go beyond it. The downside of shares is their prices can be quite volatile. Their value can go up and down constantly. There's also the risk that if a company underperforms, or if the market works against you, the value of shares could go down and you may get back less than you invested. That can feel quite unsettling. That's why equities are usually seen as a longer-term investment. The idea being that over time, the ups will outweigh the downs. So equities could be a good for longer-term growth, but come with less certainty.

And fourth, property. Just as it sounds, this means investing in property but rather than one single house or flat, it's usually a share in a wider portfolio of properties. And most of us are familiar with the idea of property investment. And many people like the thought of bricks and mortar. Of course, the value can still fall as well as rise. As you know, selling a property, however, can take time. So it's an asset class that may not be as fluid, or liquid as we sometimes say in finance, as some of the other asset classes.

So hopefully, you get an idea of what we mean by asset classes. Each has its own role, its risk, and its reward, and each can contribute to a balanced portfolio. We could have even gone on to consider other asset classes such as commodities, infrastructure, or even fine art and collectibles.

And it's worth remembering that if you do invest in any of these asset classes through a fund, you don't actually own these assets directly yourself. The fund does, on your behalf.

The key takeaway is that there are many asset classes you can invest in, and you don't need to pick just one. Funds allow you to combine different asset classes in one investment, giving you diversification and the benefits of professional management. Understanding these building blocks make it easier to make smart decisions when we start looking at the practical steps of investing.

That's a wrap on episode 2. We've taken a look at some of the different products you can hold investments in, talked about how much you might want to invest, walked you through some smart actions to build and maintain a portfolio that works for you, and explored some of the different types of asset classes.

But if there's only one thing to take away from today's episode, let it be this: take your time. Time is your investment friend. Take your time to consider your options, and hopefully watch your investments grow over time.

Next time, we'll build on everything you've learned today, and take a step further into your investment journey. We'll see you there.

This video is for educational purposes only. This should not be viewed as advice or recommendation to invest. Investing offers the potential for better returns than cash savings over the long term (5+ years).  But there are risks, the value of your investments may go down as well as up, and you may get back less than invested.  
If you want advice on investment choices, then we’d recommend speaking to a financial adviser. There may be a charge for advice.