Adding a test site to web server that has my live website

Good afternoon,

I have a live website https://www.example.com that has WordPress installed in the root. We have gotten to the point where we need to install another instance of WordPress in a sub-folder so we can begin working on an update to our current site.

My questions is, once I create the sub-folder /demo, do I then proceed with the WordPress instructions and download the new installation in the /demo folder and then set up the database as normal?

I have never done this before, so want to check before doing this.