How to invest £20,000… and grow your own ‘Super Isa’: follow these six golden rules and watch your savings grow

‘Invest, invest, invest!’ bellowed chancellor Rachel Reeves in her first budget statement on Wednesday. But while he was setting out his ambition for the country, that mantra applies with equal urgency to individuals.

This is because investing is the secret to generating the funds necessary to achieve what you want in life and fulfill your retirement dreams.

Prime Minister Sir Keir Starmer indicated before the Budget that investors do not fit his definition of workers.

So, for the record, let’s make this clear: investing is for workers; In fact, it is essential to make the most of your hard-earned money. Don’t let anyone – not even a Prime Minister – tell you otherwise.

And while we debunk investing myths, here are three more.

Investing is not difficult, it is not only for the rich and it does not require much time.

The most difficult thing is to start; Afterwards it can be a piece of cake, if you follow these six golden rules.

In this guide, we’ll show you how to invest £20,000 (the maximum amount you can save into a tax-free Isa each tax year) to build a Super Isa. But you can start with as little as £25 a month and watch your savings grow.

What’s more, every penny of your wealth will be protected from whatever the Chancellor throws at savers in future Budgets.

Rule 1: Bank first in case of emergency

You are likely to accumulate greater long-term savings by investing your money rather than depositing it in a savings account.

But when investing you will experience many more ups and downs along the way. That’s why you should only invest money that you won’t need to spend for a while (five or ten years at least). The last thing you want is to be forced to cash in on your investments when they’ve hit a rough patch and before they’ve had time to recover.

If you have unsecured debts (for example, credit cards or overdrafts), pay them off before you start investing. Then, set aside some cash in an emergency savings account; Three to six months of expenses is a good rule of thumb. This way you will be covered if you need to replace the washing machine, for example, or if you are out of work for a while.

Isas are a great home for your savings because all interest, dividends and capital gains are earned tax-free.

You can pay both cash Isas and stocks and shares Isas within the same tax year, as long as you don’t exceed your £20,000 allowance.

So if you have £20,000 in savings, you could put a reassuring portion of this into

a cash Isa in case you need it at short notice, and the rest in a Stocks and Shares Isa to grow.

Rule 2: Start simple

You don’t need to have a view on the outlook for the UK economy to start investing. You don’t need to know which companies are showing potential or even understand the ins and outs of bonds and gilts.

Of course, investing can be a rewarding hobby or project, but you can still enjoy the excellent returns it offers without putting in hundreds of hours.

The key to success when starting out is to keep it simple.

There are a growing number of cheap index funds available to everyday investors that allow them to buy a small number of hundreds, thousands or even tens of thousands of companies in a single fund. They do this by purchasing shares of all the companies within a stock index. This way, you won’t have to choose which companies to invest in; instead, you will be able to purchase the lot.

For example, a FTSE 100 tracking fund would contain shares in each of the 100 largest companies listed on the London Stock Exchange. An MSCI World Index fund would hold shares of all of the world’s largest companies.

The downside to these funds is that, by their nature, they cannot beat the market. They allow you to buy the entire market, meaning you will do no better or worse than average. The advantage, however, is that you save yourself the trouble of trying to determine which investments can make you more money than the rest.

Furthermore, over the long term, a simple, well-diversified portfolio of stocks from around the world tends to increase in value and offer better returns than the interest earned on a cash savings account.

The second advantage is that they are usually very cheap. For example, Fidelity’s Index UK fund offers you an investment in companies listed on the London Stock Exchange, with an ongoing charge of 0.06 per cent.

To put this in perspective, actively managed funds, where

A portfolio company is carefully selected by an expert fund manager and can easily impose annual charges of more than 1pc.

Most High Street banks and investment platforms offer a range of five or six pre-determined funds that require little or no experience from investors to hold.

They will help you choose which one is right for you depending on the risk you are willing to take. The more risk you take, the greater the chances of losing money, but also the greater the returns you are likely to earn in the long run.

Several investment companies also offer unique funds that are designed to contain everything needed for a balanced portfolio. You can buy them within your

Isa to grow your wealth with minimal effort.

For example, if you’re saving for retirement, asset manager Vanguard offers a variety of Target Retirement funds that simply require you to indicate when you expect to stop working to determine which one is right for you.

The funds contain stocks and bonds in a mix appropriate for someone in their life stage. As you age, Vanguard changes the mix of stocks and bonds so that the fund changes with you, rather than you having to change funds as you age.

The idea is that investments become less risky (and more stable) the closer you get to retirement. They cost only 0.24 percent in ongoing charges.

Its LifeStrategy range offers a similar level of simplicity. These are five funds, containing a mix of stocks and bonds, and you answer questions to determine how much risk you are willing to take. In general, the higher the risk, the better the likely returns. Vanguard then suggests the appropriate fund. These cost 0.22pc per year.

Asset manager BlackRock has a similar range called MyMap, which offers eight funds with varying levels of risk. These have respective ongoing charges of 0.17 per cent, or 0.28 per cent for the income version.

Unlike Vanguard funds, these have more built-in flexibility to change portfolio composition based on market conditions. But you don’t need to worry as everything is done for you.

BMO’s Sustainable Universal MAP range is a set of five funds, each with a different risk profile. They are designed with sustainability in mind and are overseen by a team of managers. They have a continuous charge of 0.35 pc.

If you’re looking for somewhere to grow your £20,000 Isa, one of the all-in-one funds mentioned above could be a great starting point.

Rule 3: Make sure you can sleep

The results of the investment should be exciting: the life ambitions it helps you achieve and the security it provides. But

the trip itself shouldn’t be.

If you find yourself nervously reviewing your investments during the day, or if your fluctuating portfolio balance keeps you awake at night, you’re taking on too much risk.

The investment must be long term. That means you should have a portfolio of stocks and shares that you feel comfortable investing in for months or years, through the ups and downs.

Rule 4: Bring your portfolio to life at the perfect time

A portfolio of stocks, bonds and index funds from all sectors and companies around the world is a great starting point. That way you won’t be overly dependent on any one company or type of investment in case it goes wrong.

But once you have that solid foundation, you can start adding stocks, funds or investment trusts that you think have the potential to outperform.

This is where investing may require more time, experience and consideration. The Mail on Sunday’s Wealth and Personal Finance section is always packed with great ideas to consider for your portfolio.

In tomorrow’s section, a Midas Special investigates the companies and sectors that will benefit from this week’s budget. Your investing platform may also have interesting ideas and information that you can learn from, such as model portfolios or lists of recommended funds. However, remember that balance is always key.

A popular investment strategy is called “core and satellite.” Buy a core of low-cost funds containing a wide range of investments from around the world. You then buy small amounts of funds or more specific companies that you think will perform especially well in the future. Funds actively managed by an expert fund manager can play a role here.

Also, keep in mind that maintaining a core is usually as effective as adding satellites, so don’t feel like you have to make bold investments if you don’t feel confident (or just don’t have the time).

Rule 5: Don’t pay more

To build a Super Isa, you will need to keep as much money as you can safely grow.

Make sure you don’t hand over a penny more than necessary in fees.

When you start investing, you will usually have to pay a fee to the company that provides your Isa and another to buy the funds or companies you invest in it.

Spending more does not mean you will get a better result.

To find an investing platform with all the tools you need, but at a fair price, check out our overview at thisismoney.co.uk/platform.

Rule 6: Don’t put it off

You might be watching the news—the budget fallout, the looming U.S. election, seemingly endless global instability, and more—and wondering: Is now really a good time to invest? And it is understandable that this is so.

However, if you are investing for the long term, you should be able to weather the ups and downs of whatever the future holds.

One option to alleviate any fears you may have about investing at the wrong time is to drip inject your cash into the market.

That means you won’t put all your money in right before the markets rise, but you also won’t put all your money in right before they fall.

You could put £1,666.66 into an Isa each month and, at the end of the year, your Super Isa will be filled with your full £20,000 allowance.