Investing: what are you actually buying?
Investing can seem like a black box. But once you strip away the jargon, it’s really about owning things – and there are only a few main types of investments worth knowing.
Key takeaways
Investing means owning real things – your money buys something specific, not a vague “market”.
Your money can grow in two main ways: the value of what you own could go up and the investment could pay you regular amounts along the way.
You don't need to pick individual winners – many people use funds or ETFs – which spread money across lots of investments at once – and hold them for the long term.
You’ve probably heard the word investing plenty of times. But have you ever stopped to ask what’s actually happening once your money’s been invested? Where does it go? What does it buy? And how, exactly, is it supposed to grow?
The short answer is: investing is really just about owning things.
That’s it. Once you strip away the jargon, there are only a few types of investments worth knowing. So let’s go through what you’re actually buying, how your money can grow, and what makes prices move.
Where does my money actually go?
When you invest, your money is used to buy things.
That thing is called an asset – which is just a finance word for things you own that can change in value.
Once you’ve bought it, you own it – whether that’s a slice of a company, a slice of a fund that holds lots of investments, or something else. The point is: you own something specific.
Your money doesn’t disappear into a vague “market” (the place where investments are bought and sold). It’s tied to those specific things you own, which can rise and fall in value over time. For some people, that framing can mark a small but important shift in thinking: investing isn’t a mystery; it’s ownership, in a slightly different form.
What am I actually buying?
Let’s talk about three main types of investments worth knowing:
Shares – a small piece of a company, also called a stock. Companies are usually split into millions of shares, so each slice is tiny – but it gives the holder real ownership of part of that business.
Funds – a “basket” that holds lots of investments at once. Rather than picking individual companies, a fund spreads your money across many. Some funds hold just a few companies, while others hold thousands. Funds can also hold different types of investments, like bonds, property, or commodities. Bonds are loans to governments or companies. Property means buildings or land. Commodities are raw materials, like gold, oil, or wheat.
ETFs (exchange-traded funds) – funds you can buy and sell like shares. They work like regular funds, but they’re traded on a stock exchange (a marketplace where shares are bought and sold) throughout the day.
There are other investments too, but for most people, shares, funds, and ETFs are where things start.
How can my money grow?
Investments can go up in value in two ways:
Growth: The price of what you own goes up. If you bought a share at £10 and it’s now selling for £12, your investment has grown by £2. That gain is “on paper” though – meaning it’s only really yours if you sell.
Income: Some investments pay you money on a regular basis. Companies sometimes pay out some profit to the funds and individuals who own their shares, and those payments are called “dividends”. Those payments can be taken as cash or be used to buy more of the company’s shares.
Neither type of growth is guaranteed. Values can fall as well as rise, and income can be reduced, paused, or cut depending on how an investment is doing.
Why do prices move?
Investment prices can change every day – sometimes minute to minute. There’s no single reason, but there are a few usual suspects.
Supply and demand: If more people want to buy something than sell it, the price usually rises. If more people want to sell, the price tends to fall.
A company’s performance: If a company is making more money, launching new products, or doing better than expected, its share price may rise. If things go wrong, it may fall.
The bigger picture: Changes in interest rates (which affect how cheap or expensive borrowing money is), economic news, and world events can move whole markets at once.
How people feel: Sometimes, prices move because investors are feeling confident or nervous, not because anything has actually changed about an investment itself.
Usually, several of these things are happening at once. That’s why prices can feel unpredictable at times.
What do people often get wrong?
There are a few common ideas about investing that don’t quite hold up.
“Investing means knowing how to pick winners.” - Not really. Many people invest in broad funds or ETFs that own tens or hundreds of companies, rather than trying to pick which single one will do best.
“I need to know everything about investing before I start.” - No, you don’t need to be an expert. Research has shown that the basics – owning a spread of things and sticking with it over time – have been shown to go a long way.
“It’s the same as trading.” - Again, no. Trading usually means buying and selling on short time frames, to try to profit from price movements. Long-term investing is typically more hands-off – you buy it, then largely leave it alone.
What does this mean for me?
You don’t need to pick the next big thing, time the market perfectly, or check your investments every day. Many people start simply, with things like:
Broad, spread-out funds or ETFs that own lots of investments at once, rather than shares in a single company.
Small amounts invested at set intervals – sometimes called “pound-cost averaging”. This practice can help smooth out the price bumps along the way.
Automatic monthly contributions, so investing happens consistently, not sporadically.
To be clear, investing isn’t right for everyone at all times. It usually works best when you can leave the money invested for at least five years, and when you are comfortable with the value rising and falling along the way.
If you’d like to think through whether you’re in a good place to start, the readiness checklist offers a quick self-check.
Next up: a take a look at our guide on a simple way to start investing.
This information is for education only. It’s not financial advice or a personal recommendation.
Moneysupermarket.com Investments Limited is an appointed representative of P1 Investments Services Limited, which is authorised and regulated by the Financial Conduct Authority (FCA FRN 752005).
