Investing money can seem a little bit complex and daunting at first, especially if you’re completely new to the idea of actually saving or investing in any way shape or form! However, plenty people have made brilliant returns on shrewd investments without having too much risk to their bank balance.
Therefore, online investing has only gotten more and more popular. With the internet having opened things up on a colossal scale in various ways, no longer is investing money something that only people who already have lots of money can do. You can now invest any amounts of money with the right platform in just a few minutes. Even if you only have a small lump sum or can only afford a small regular monthly payment.
Is Now the Right Time For You to Start Investing?
If you are completely new to investing and are not ready to start looking at picking your own funds or shares then there area number of reputable services available these days that will take all the complications out by offering simple managed and ready made investment options. Meaning all you have to decide on is your risk level.
However, please remember if you currently have debt then investing on any level may not be right for you and you may want to consider paying down debt first before looking to start investing any amount money.
5 Ways to Start Investing with Small Amounts of Money
You don’t have to be earning lots of money to start investing. The beauty of making money from regular investments means you may often only need to put small amounts away here and there, whatever you are able to afford. Here are five great tips to get you started if money’s looking tight.
Take Full Advantage of Your Employers Pension Scheme
All workplaces should have some form of pension scheme laid out, which you’ll be able to pay into. The benefit of enrolling lies in the fact that you only have to sacrifice a small amount of your income each month.
All UK companies now have to offer a workplace pension pot of some kind. Therefore, you could split a small amount of your regular PAYE statement off to go into safe keeping. You could be shrewd about investing in this way be gradually increasing your contributions each year.
What’s more, your workplace is obliged to match any money you put into the pot up to a certain percentage. Therefore, if you’re investing £250 of your income per month, that’s already going to be doubled.
Set up a Personal Pension
Alternatively, if you are self employed or if you prefer not to enter into your workplace pension scheme (or even as an addition to your workplace pension), you could set up your own personal pension scheme.
This will allow you to pay into a retirement lockbox that is tax-protected until you come to withdraw it at a later date. You won’t be getting the company cash matching, but you will have much more flexibility over where your money goes, how much you choose to invest and how it is used.
Skill Up to Freelance or Start a Side Hustle
The more skills you have, the more money you could potentially be making. Have you got a few hours each week where you could be learning profitable skills? You could learn how to program, how to use illustration software, or how to speak a new language.
Think about your current skill set and your current field of expertise. How could you expand your remit with additional skills? Investing time is the best possible route to take if you simply don’t have the money available. The more skills you have, the more opportunities will become available. You could expand your business. Or you could start a side hustle or take on new freelance jobs from home to make extra income.
You could also completely change your career. If you have found a lucrative role or career pathway which you are particularly keen to try, it makes all the more sense to invest serious time in skilling up. Never stop learning, and never stop training, no matter what you do.
Start Saving Even if it’s Only a Small Amount
This is going to seem fairly obvious to anyone who may not have much money to invest, but think about approaching saving and investing from the perspective of a rainy day fund. You don’t have to save much to get started. Even if it’s as little as £5 or £10 here and there, money will mount up if you simply don’t draw on it.
It’s possible to save £10 a month and eventually look at making a million. You simply need to look carefully at your expenditure and work out where money will be better put to work by investing on a regular basis. If you are passionate about making money for the future, you should be more than willing to cut off a few unnecessary expenses in the here and now.
Building up small is easy. Take out an investment ISA or savings account and strive to put in small amounts, to begin with. A managed investment ISA will allow you to start compounding money, year after year. If you have little money, do still try to invest something. We all have to start somewhere.
Pay Off Your Debts First
This may seem counter-productive, but it makes sense to pay off debt sooner rather than later. Investing small amounts of money while you have debt to pay off isn’t a wise idea in the long run. While you still have debt to pay, you are going to be chasing your tail as far as your credit score is concerned.
Debt remaining on file is going to impact heavily on how much you will be entitled to borrow and invest in future. Therefore, it makes sense to start digging yourself out of a hole little by little. It can be done!
Best Investment Platforms for Beginners UK
If you’d like to make use of an investment platform but aren’t sure where to start, don’t worry. When it comes to investment platforms there are numerous available in the UK. Services like Interactive Investor or Interactive Brokers for example, are very popular. However they are likely better suited to those who are not completely new to investing. Instead, here’s my pick of some of the best beginners’ services available for you to check out online right now.
Wealthify is a well-reviewed online investment system which leads with a simple website and a simple message. You can, as the site says, invest as much or as little as you want, either in a one off payment and or regular monthly payments from as little as £1.
The company has been around since 2016 and has firm backing from Aviva. This system allows you to choose your product and enter a few details including your level of risk tolerance. Your investment will then be managed by experts who will be able to minimise your risk of loss by spreading your money across a wide array of opportunities.
There’s no minimum investment here, but there is probably less control over your portfolio than you may like, depending on how involved you want to get. However, it’s nice and flexible, and there’s tons of support.
Moneyfarm is a great service which focuses on the importance of investing for the future. Their three-step program simply allows you to fill in your investor goals and they will match you up with the right portfolio. You’ll then be able to start funding your investments on the go. It really is as easy as that!
You get complete access to your investments 24/7, but is that enough? Some investors may want to take more absolute control over what they can and can’t invest in, in which case, Bestinvest, detailed below, is probably a better fit. You’ll also need to have £1,500 minimum to start with. For more details take a look at our Nutmeg vs Moneyfarm comparison.
Bestinvest is an online system which largely focuses on ISAs, and is perfect for the self-starter. Boasting several multi-investment portfolio systems, the site lets you fine-tune how you want to invest your money, and how much intervention you’d like from managers. You can choose from a selection of investment scenarios with ease.
Bestinvest is a great option for any new investors looking for a wide range of options. It’s probably best marketed to ‘DIY investors’ who want to avoid stuffy plans and restrictions.
However, if you are completely new to investing, you may wish to look at a more user-friendly service first and foremost.
These are just a few of a number of great platforms available online for you to start investing through. There are plenty more out there, but do make sure to read up on what other investors have had to say and pick the platform most suited to your investment plans and experience level.
You shouldn’t ever be dissuaded from investing if you have little money to spare. We all have to start somewhere! Focus on clearing any debts you may have as much as you can, before thinking about saving, even if piecemeal and sporadically, for the months and years still to come.