How to invest when you’re not interested in finance

The finance industry is often associated with Wolf of Wall Street and finance ‘bros’ whose main interest is talking up crypto. You might think investing is only for these types of people, yet it is something that most individuals can do, and without much effort or knowledge.

At first glance, investing can look complicated from a practical point of view. There are thousands of options for shares, not to mention bonds and funds. Prices can move around a lot and there’s a lot of jargon.

Without spending a lot of time getting to know the market, choosing investments can feel overwhelming. Fortunately, there are certain types of investments which can remove all the stress.

Investing through a tracker fund

One of the most popular ways for people to invest their money is through a tracker fund, which is a basket of different things like stocks or bonds. Tracker funds also go by the name of index funds or exchange-traded funds (ETFs).

You can choose from broad-based indices such as the MSCI World which is a basket of companies on stock markets globally or indices that provide exposure to more specific areas such as the technology sector or companies that pay generous dividends.

A tracker fund aims to mirror the performance of the index is it following. For example, if you bought a FTSE 100 tracker fund, you would get exposure to an index of the 100 biggest companies on the UK stock market. If the FTSE 100 went up by 10% in a year, so should your index fund minus any charges.

You’ll find that charges are typically lower with tracker funds compared to ‘active’ funds. That’s because tracker funds are more straightforward to run. They simply follow what’s in an index and that’s ultimately decided by a computer following a set of rules. In comparison, active funds are run by an expert or team of experts, and charges are typically higher because they pay the manager or managers’ salaries.

Can an index tracker keep pace with hand-picked investments?

Each year, AJ Bell tracks how active funds perform versus tracker funds. In the past 10 years, just a third of active funds produced a better return than the index-tracking funds. When you focus on funds with invested in companies around the world, just 17% of fund managers were able to outperform over that period.

Picking successful investments is hard and even the experts don’t always get it right. So don’t think you need to go night school to learn all about finance to make money.

If beating the market is hard, why do certain investors still buy active funds? It’s because there are still plenty of funds that deliver superior returns – you just need to choose wisely.

Let’s put that into some context. The MSCI World index generated a 178% total return in the 10 years to 29 April 2025. Funds that outperformed this index over the same period include Fundsmith Equity (+205%), Liontrust European Dynamic (+198%) and Jupiter Merian Global Equity (+193%).

The key challenge for active funds is to outperform on a consistent basis and that’s harder than you think. For example, of those three active funds, only Jupiter Merian Global Equity has outperformed the benchmark index over the past five years.

For many people, having an investment that simply moves in line with the market is adequate, and that’s what tracker funds do. It removes the stress of worrying if you’ve picked a manager that can stay in pole position or not.

Index funds rise in popularity

As of the end of 2024, near a quarter of all UK assets under management were held by index tracker funds, according to the Investment Association. Ten years ago, this was just 11.3%. While actively managed funds have seen investors remove money in each of the past three years, tracker funds have seen investors continue to pour more money in.

Considerations for an index

While index tracking funds are a simple way to invest, it is still important to have an idea of what kind of product you are investing in. Index tracking funds typically have lower fees than actively managed funds, but they can still vary, so ensure that the fee you are paying will not eat too much into your returns.

Indices can also have varying amounts of diversification. For example, you may have an index that is only exposed to US companies. If the US market starts doing poorly, your investments could suffer. Global indices, however, cover a variety of countries. This can make them more resilient if a single region faces struggles. You can also choose to invest in variety of indices to spread your money over different regions along with different assets.