Learn About Investing

Learn About Investing

Brush up on your investment knowledge through our jargon-busting investment topics and interactive games.

Top Ten Investment Questions

We asked what the most important questions were for people new to investing. Here are our answers to the top ten.

Investment Topics

We have over 40 articles on a broad range of investment topics to help you get to grips with the nuts and bolts of investing.

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Interactive

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Investment Quiz

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  1. Which of these well-known poultry-themed sayings best describes the rule of diversification?
    1. Don't count your chickens before they hatch
    2. Don't put all your eggs into one basket
    3. Which came first, the chicken or the egg?
    4. The cockerel does the crowing, but the hen lays the eggs
    That’s right! Diversification means spreading your investment across asset types and sectors. Which generally means less risk when compared to investing in just a single asset.
    Sorry, the answer is actually b. Diversification means spreading your investment across asset types and sectors. Which generally means less risk when compared to investing in just a single asset.
  2. One effective way of increasing your overall investment over time is to allow your returns (the profit you make) to earn their own returns by reinvesting them, rather than withdrawing them from the investment. In practice this is called?
    1. Combining
    2. Compacting
    3. Compounding
    4. Connecting
    That’s right! Compounding or Compound Interest really can make a big difference to the value of your investment over the long term.
    Sorry, the answer is c. Compounding or Compound Interest really can make a big difference to the value of your investment over the long term.
  3. ISAs (Individual Savings Accounts) come in two types, Cash or Stocks & Shares. You can put a limited amount of money into one type or both each year, and each has its own benefits and level of risk. But what is this year’s ISA allowance?
    1. Up to £15,240 split 50/50 between a Cash and a Stocks & Shares ISA
    2. Up to £15,240 with the whole allowance eligible to be saved in a Cash ISA or a Stocks & Shares ISA
    3. Up to £15,240 with a maximum of 50% eligible to be saved in a Cash ISA
    4. Up to £15,240 with £5,000 in a Stocks & Shares ISA and the remainder in a Cash ISA
    That’s right! For the 2016/17 financial year you can invest the whole £15,240 limit via a Stocks & Shares ISA or a Cash ISA, so long as the combined total does not exceed £15,240. Cash ISAs are less risky, but offer less potential return on your investment. Whereas with Stocks & Shares ISAs the value of your investment can go up as well as down.
    Sorry, the answer is b. For the 2016/17 financial year you can invest the whole £15,240 limit via a Stocks & Shares ISA or a Cash ISA, so long as the combined total does not exceed £15,240. Cash ISAs are less risky, but offer less potential return on your investment. Whereas with Stocks & Shares ISAs the value of your investment can go up as well as down.
  4. Which of the following breakfast staples is not traded as a commodity?
    1. Cereal
    2. Coffee
    3. Milk
    4. Freshly squeezed orange juice
    That’s right! Freshly squeezed orange juice is not traded on the commodity exchange. But frozen concentrated orange juice is, along with coffee, milk, cereals and sugar, plus fossil fuels, precious and industrial metals and precious minerals like diamonds.
    Sorry, the answer is d. Freshly squeezed orange juice is not traded on the commodity exchange. But frozen concentrated orange juice is, along with coffee, milk, cereals and sugar, plus fossil fuels, precious and industrial metals and precious minerals like diamonds.
  5. Opening a Stocks & Shares ISA is a great way to start investing. But which of the following is NOT a benefit of investing through an ISA?
    1. You can invest an unlimited amount of money
    2. Any profit you make is tax-free
    3. You can access your money any time
    4. You can transfer your investment between ISA providers
    That’s right! With an ISA there is a limit to how much you can invest each year. However, any capital gains you make are tax-free, your money is not locked in for a specified amount of time (unless it is a Junior ISA) and you’re not locked in to a particular provider.
    Sorry, the answer is a. With an ISA there is a limit to how much you can invest each year. However, any capital gains tax you make are tax-free, your money is not locked in for a specified amount of time (unless it is a Junior ISA) and you’re not locked in to a particular provider.
  6. There are many different classes of asset (such as commodities, fixed interest, alternatives, etc.) traded on various exchanges across the world. But which of the following assets is known as an equity?
    1. Oil
    2. An original Picasso
    3. Stocks
    4. Bonds
    That’s right! Equities are just another way of saying stocks and shares which are simply a piece of a company available to be bought. Oil is a commodity, governments and other big businesses often take loans in the form of fixed-interest bonds and if you’re lucky enough to own a Picasso, this would be known as an 'alternative' investment.
    Sorry, the answer is c. Equities are just another way of saying stocks and shares which are simply a piece of a company available to be bought. Oil is a commodity, governments and other big businesses often take loans in the form of fixed-interest bonds and if you’re lucky enough to own a Picasso, this would be known as an 'alternative' investment.
  7. Stock markets can be volatile places at the best of times. But what name is given to a market when it moves from a state of high investor confidence to one of pessimism?
    1. Bull market
    2. Bird market
    3. Bear market
    4. Boar market
    That’s right! When investor confidence is low and affecting the market as a whole it is known as a Bear Market. On the flip side, when confidence is high and things are on the up it is known as a Bull Market.
    Sorry, the answer is c. When investor confidence is low and affecting the market as a whole it is known as a Bear Market. On the flip side, when confidence is high and things are on the up it is known as a Bull Market.
  8. We all like to know that someone is looking out for us. In the UK, which organisation regulates the financial industry and helps to keep investors and savers protected against fraud and bad financial practices?
    1. Financial Services Authority
    2. Financial Conduct Authority
    3. Financial Safety Association
    4. Financial Confidence Association
    That's right! Until April 2013 it was the responsibility of the Financial Services Authority (FSA), but with a new focus and remit the industry is now regulated by the Financial Conduct Authority (FCA).
    Sorry, the answer is b. Until April 2013 it was the responsibility of the Financial Services Authority (FSA), but with a new focus and remit the industry is now regulated by the Financial Conduct Authority (FCA).
  9. Active funds can be measured against a standard so investors can see how well they are performing. This is called a…?
    1. Yardstick
    2. Touchstone
    3. Datum Line
    4. Benchmark
    That’s right! Benchmarks are very important and investors should know what the performance of their funds is being measured against.
    Sorry, the answer is d. Benchmarks are very important and investors should know what the performance of their funds is being measured against.
  10. Knowing about risk is an important part of investing and different asset classes have different levels of risk. Broadly speaking which of the following asset types has the lowest level of risk?
    1. Cash
    2. Bonds
    3. Shares
    4. Property
    That’s right! Cash is the least risky which is partly because of its low volatility. Other assets are likely to fluctuate more in value and have potential to generate bigger returns alongside greater risk of loss.
    Sorry, the answer is a. Cash is the least risky which is partly because of its low volatility. Other assets are likely to fluctuate more in value and have potential to generate bigger returns alongside greater risk of loss.

Feel like testing your investment knowledge? Have a go at our quick quiz to see.

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