You can invest with any amount: tips from a financial advisor for beginners.

The ease of investing

According to The Sun: It has become easier today to invest and grow your capital.

Many people think that investments require thousands of pounds, but you can actually start with just £10 a month.

Rebecca Penny is a regulated financial advisor who runs her own business planitfinancial.co.uk.

“When your money is in the bank, there is a risk that its purchasing power is diminishing due to inflation,” she says.

“By investing, you make your money work for you. This sounds scary, and people worry about potential losses in the long run.”

“However, sitting on cash is always a risk, as your purchasing power diminishes over time due to inflation.”

“The risk of investing is more about managing and adapting to market changes.”

It is always useful to have some cash reserve available before you start investing.

Investing is a long-term affair. You should plan to leave your money for 5-10 years.

You also need to be prepared for potential losses, as stock prices can fluctuate.

Rebecca shares her tips on investing based on your budget.

For a budget of £500

£500 is a good amount to start investing. With the right strategy, you can grow your wealth.

Although the income may be less than with an initial amount of £20,000, this is no reason to postpone investing – the sooner you start investing, the sooner you can secure your financial future.

When starting investments, it is important to first determine how long you can leave your money. It is generally recommended to invest if you are ready to leave your funds for at least three to four years.

You can access your investments, but it's better not to withdraw them during market downturns.

Before investing, it is advised to first create an emergency fund that covers three to six months of income. This will help avoid interfering with your investments in case of unforeseen circumstances.

For beginners, there are low-cost platforms where you can make small monthly contributions, often with amounts from £10 to £25 a month. This is a good place to start.

For example, Wealthify and Nutmeg offer ready-made portfolios, where you do not need to choose investments yourself.

A ready-made portfolio is a collection of investments that are selected and managed for you. Typically, it is a mix of assets such as stocks, bonds, and sometimes real estate or commodities.

They are tailored to your risk level – cautious, balanced, or adventurous.

For a budget of £1,000 – £5,000

When you accumulate £1,000, ready-made portfolios remain a good option. But you may want to start selecting your own investments as your confidence grows. Platforms such as Vanguard offer the possibility of self-selection as well as ready-made funds.

When choosing your own investments, you decide which funds, stocks, or other assets to buy. This gives you more control and flexibility but requires more effort. Therefore, it is not always suitable for newcomers who have never invested before.

TIPS

BE TAX-EFFICIENT: Remember that the value of investments can fluctuate. It is important that your actions are tax-efficient, so using an ISA to hold your investments is a common solution.

You can now have both cash and stocks ISAs at the same time, but the total contribution is limited to £20,000 per tax year.

Each gain is tax-free. If you invest outside of an ISA, be aware of capital gains tax.

CHECK YOUR PENSION: If you have a pension fund, you are already an investor. This is a good place to start – familiarize yourself with the documents.

MAKE YOUR MONEY WORK FOR YOU: By keeping money in the bank, you allow the bank to use those funds to lend to others and earn more than they pay you.

CHECK SAVINGS RATES: Interest on savings is taxed, so keep this in mind when calculating the returns from savings compared to investments.

For a budget of £5,000 – £10,000

Providers of the previous options are also suitable for amounts over £5,000 – here you will start to feel the effect of compounding significantly.

Don’t panic about market fluctuations. If you have £10,000 and the market drops a bit, it can be hard to watch. History shows that markets usually recover, so patience is key when investing.

It is recommended to seek financial advice regardless of the amount of your investments.

Some platforms, such as Robo-advisors, also charge fees for their services.

For a budget of £10,000 AND MORE

With that amount, you can start diversifying your investments, although this is not mandatory if you are uncomfortable with it.

Platforms such as Trading 212, Interactive Investor, and Hargreaves Lansdown offer a wide range of investments, such as ETFs or individual company stocks.

It is advisable to discuss your investments with financial advisors who can help develop a strategy to achieve your goals.

At this stage, it is recommended to learn more about the investment world and ensure that your actions are tax-efficient. Also, don’t forget about ethical aspects – you may be interested in excluding certain investments from your portfolio according to your beliefs.