How To Invest With Little Money

It seems a pipe dream for many of us to get on an even keel financially, to the point where we can think about saving. But many think that you must have a lot of money to be able to save regularly. That is not true. We take a look at how to invest with little money. We will start with the really small amounts.

Before You Begin

It should be pointed out that saving is something that can only be done without debt. Something like a mortgage can be excused, but lower level debt such as personal loans and credit card debt should be dealt with before you save. This is because savings are put to better use by paying off debt that attracts interest on it than by building savings on lower interest. It is simply not the best use of what money you have.

Many advisers suggest that once you are saving and building up funds, the goal should be to accumulate enough to cover three months income. 

Various banks and building societies allow you to save small amounts in regular savings accounts. The minimum amounts vary so check what is available out there. Some require minimum monthly deposits at £25, £50 or £100. You can compare rates at websites such as Moneyfacts.co.uk.

It might not seem a lot to put as little as £10 a month into an account, but it will add up to a significant amount over time. And whilst you put away £10 now, you may be able to increase the figure in the future. It is about getting into the habit of saving, as much as how much you put away. It will stand you in good stead for the future.

How To Invest With Little Money. Which Type Of Account?

If you don’t intend to touch or access your money for a while then a slightly better return might be achievable from a fixed-rate regular savings account. Interest rates of up to 4% are available on such accounts. The normal caveat is that you must deposit funds at least monthly for a year minimum.  Current interest rates may be unappealing, but you are building a savings balance for when rates finally do pick up.

How To Invest With Little Money. £50 a month?

How To Invest With Little Money. Stocks And Shares

How to invest with little money? This next option does not come without any risk of course, but is certainly worth considering. The risks are tolerated because the potential rewards re so much higher. If someone had invested £25 every month for the past 30 years in the average investment company it would now be worth £47,225 according to the Association of Investment Companies. Note that volatility, especially now is a constant threat with stocks and shares, and such an investment should only be with long-term gains in mind, not instant profit. Look for a fund that spreads your money across a blend of shares, corporate bonds, commercial property and commodities.

How To Invest With Little Money. Assistance

Many brokers offer online tools to help you choose the right investments fund, or you could invest in a pre-selected investment portfolio based on different levels of risk. There are stockbrokers that will also offer investment plans. Take a look at what they offer.

£100 a month

Another option is splitting your money between two or more investment funds.

Buy Items

If you have an eye for such things, such as Lego sets that you know will grow in value, then why not invest in buying items and sitting on them as they mature in value. Something like Lego is unlikely to lose value if not opened, though as always this is not a risk-free strategy.