You don’t need thousands of pounds to start investing. With as little as £100 — or even less — you can own a slice of thousands of companies around the world and begin putting your money to work. Here’s how to do it the right way.
Why investing beats saving (over the long term)
Savings accounts protect your money but rarely beat inflation over the long run. Investing in the stock market has historically returned around 7–10% per year on average over long periods — though past performance doesn’t guarantee future returns. The key word is long term: investing is for money you won’t need for at least five years.
Step 1: Choose a stocks and shares ISA
For most UK beginners, a stocks and shares ISA is the best starting point. All returns inside an ISA are free from capital gains tax and income tax — so your gains are yours to keep. Providers like Freetrade, Nutmeg and Moneybox offer beginner-friendly ISAs with low fees and simple interfaces.
Step 2: Choose a global index fund
Don’t try to pick individual stocks when you’re starting out. Instead, buy a global index fund — a single fund that tracks thousands of companies across the world. Two popular choices are the Vanguard FTSE All-World fund and the iShares MSCI World ETF. Both give you instant diversification for a tiny annual fee (around 0.2–0.5%).
Step 3: Invest regularly and ignore the noise
Set up a monthly direct debit — even £25 or £50 — into your index fund. This approach, called pound-cost averaging, means you automatically buy more when prices are low and less when they’re high. Then ignore the daily news. The biggest investing mistake most people make is selling in a panic during a downturn.
What about risk?
All investing carries risk — your investment can go down as well as up. The stock market drops regularly, sometimes severely. But over 10, 20 or 30 years, the long-term trend has always been upward. The risk of not investing — having your savings eroded by inflation — is a risk too, just a quieter one.
This article is for informational purposes only and does not constitute financial advice. Investing carries risk. Please consider your personal circumstances before investing.