Use our guide to learn about investments and compare stocks and shares ISAs
Investments can be a great way of making a return on the savings you have but it's important to understand how they work as the risk involved could also mean that you lose out.
What are investments?
As with any regular savings account, an investment is simply an alternative way to get a return from your money.
However, investments come with element of risk – while you could end up earning a far greater return on your money than with a tax-free wrapper on your savings account, you may not earn any interest at all or even get your original investment back.
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The main types of investment
There are many different types of investment available, and knowing which is which and choosing between them can seem very confusing. On the most basic level, you can invest in four main asset classes:
Stocks and shares
When you buy a stake in, or 'share' of a company, the value of your investment grows or falls as the value of the company increases or decreases. You may also receive a dividend from the company's profits, depending on the company you invest in, or capital growth, where you sell your shares for a higher price than you paid for them - find out more about shares.
Bonds and gilts
With a bond, the money you invest is given as a loan to a company or the government. As a lender, you are paid interest on the loan amount, and as such, bonds are more suitable if you require a regular income, rather than long-term capital growth.
Bonds where the money is lent to the government - known as gilts - are considered to be safer and therefore generally pay a lower rate of interest - find out more about bonds and gilts.
With a property investment, you stand to receive a regular income in the form of rent from a tenant, as well as long-term capital growth if the property increases in value - find out more about investing in property.