Investing Small Amounts of Money UK Guide (2022)

If you’re wanting to start investing small amounts of money, are UK based and are not sure where to begin, we’re going to be looking at some options available to you.

If you’re just starting out in the world of investing you may already be aware that putting your money to work on the stock market can be a great long term strategy.

Allowing compound interest to go to work on your money over a number of years can potentially reap huge benefits.

Although with any investment, the value of your money can go up as well as down and you could get back less than you pay in.

If you start young enough, the power of compounding can really work in your favour and you could potentially reap great benefits financially speaking.

The growth potential of your money will also be dependent on the investment plan that you choose. There are more options available now to the casual investor than there have ever been. With this in mind, we’ll be taking you through some of the options on offer now.

Investing Small Amounts of Money UK
Enjoying this article on investing small amounts of money? Why not pin to a board on Pinterest?


Investment can very much be a game that rewards patience. The GameStop frenzy made headlines around the world with many thousands of new investors jumping in feet first into the investment world.

However, a lot of them for their fingers burned and lost lots of money.

The frenzy and surrounding hoopla was criticized by many, not least Warren Buffet, who claimed quite rightly that many youngsters were approaching investments like gambling and trying to make some quick money.

In reality, it was only those who were there at the very start who benefited from the GameStop rollercoaster.


I also invested in another so-called meme stock, AMC and lost some money myself. Although I lost some money, I learned a valuable lesson. Investments should be thought of in terms of years and decades, not days.

If you’re a small investor you firstly have to work out a few things:


Determine your attitude to risk. When selecting a stock or fund, each will have its own risk and reward profile. Generally speaking, low risk will be a more stable option. It should rise steadily through the years with little chance of making big losses. However, the chances of making large returns on your money will also be lessened.

A stock with a higher risk profile could potentially make you more money (though there are never any guarantees). But you also run the risk that you may experience big losses in some years.

A lot of this is down to your particular temperament and attitude towards your money.

Fees / Charges 

When evaluating funds, I always pay close attention to the charges associated with each fund.

High fees can really eat into your profits over the long term. Even a seemingly innocuous charge to the beginner such as 1.5% could cost thousands when applied to a long term investment.

A good way to look at it is as follows: If your plan is projecting to grow by 7% over a ten year period, simply remove the charge. So a 7% return would become only a 5.5% return.

At the start of your investment journey, this may not amount to a whole lot of difference. But look at the figures over 20 or even 30 years and you could be talking thousands.

At the end of the day, if your investment is performing well, you want as much of that money in your own pocket rather than someone else’s.

Some fees to look out for:

  • Entrance fees / loading fees
  • Exit fees / early exit fees
  • Admin charges
  • Annual management charge (AMC)

Look out for this terminology in the key features document before you invest. They all add up!


It’s easier than ever to research your investment choices. The web is awash with forums offering insights into investments. Make sure you Google your fund choice and broker to see what others are saying. Take your time and don’t jump in feet first.

The Money Saving Expert Forum is a great source of information. Facebook groups are also a fantastic resource where you can connect with kind minded individuals.

Invest in what you know

One of Warren Buffet’s key watchwords is to invest in what you know.

Don’t be fooled into throwing all your cash into the latest hot meme stock.

Been there done that, got the t-shirt! Investing is very much a long game, not a get rich quick scheme.

Trying to time the market or losing your patience thinking you’re going to miss out can be extremely costly.


There’s an old saying ‘don’t put all your eggs in one basket’.

Never has it been truer than in the world of investments. Even if something looks hot, it can be dangerous to try and double down and capitalise on your good fortune.

Stocks that are more volatile can go down just as quickly as they go up.

Again I’ve had my fingers burned backing the Chinese electric car company NIO whose stocks have been on a rollercoaster ride recently.

When you’re new to investing it can be very tempting to try and make a quick buck. After my experiences in the stock market, I really have tried to look at the long term.

  • Work out your risk profile
  • Look out for charges. Try and get them as low as possible
  • Take time
  • Research
  • Don’t follow fads or other people’s hunches
  • Diversify your portfolio

Methods of investing Small Amounts of Money


One of the easiest ways to get started investing is a pension.

UK employees today have things quite easy for them.

Full-time employees contributing at least 4% of their salary can have their employer top up their contributions by contributing another 3% to their pension fund.

I am currently with the Nest Pension Scheme and found it to be easy to use and relatively low cost.

Their current charges are a 1.8% contribution charge and a 0.3% ongoing annual charge (AMC).

Interestingly, I transferred in an existing pension of mine and there was no contribution charge. So I reduced my AMC on my previous pension from approximately 0.9% to 0.3%.

Nest offer you different investment options when you’re starting your pension as follows:

  • Nest Retirement Date Funds
  • Nest Higher Risk Fund
  • Nest Ethical Fund
  • Nest Sharia Fund
  • Nest Lower Growth Fund
  • Nest Pre-retirement Fund
  • Nest Guided Retirement Fund

You also have the option to choose a glide path which means as you approach retirement, your stocks will be gradually moved into safer options to lessen the likelihood of a stock market crash badly affecting your pension pot.

With Nest, you can log into your pension dashboard to track the performance of your plan and see your own and your employer’s contributions.

Your pension is probably the easiest way to start investing small amounts of your money in the stock market.

It’s locked away until your retirement and can be the ideal way to get your head around how investments work.

Small Investments In Pensions in Summary:

  • Get started with 4% of your salary.

Investment ISA

Investment ISAs, also called Stocks and Shares ISAs are another way to start investing. Widely available throughout the UK, you can sign up for most online and start investing in some cases from as little as £10 per month.

Like their pension counterparts, Investment ISAs are also tax-efficient. They work slightly different though. With investment ISAs you put your money away after tax has been removed from your salary.

You get a £20,000 limit per year tax-free, and when you take it out the other side, you pay no further tax on your gains.

With a pension, you get tax relief when it goes in, and when you take it out the other side you only get 25% tax-free, but just pay tax on the remaining 75%.

Investment ISAs also come in other options including Junior ISAs and Lifetime ISAs. Each has their own limits and special features.

Small Investments In Investment ISA in Summary:

  • Get started from £10 Per Month

Stock trading and investment apps

If you’ve exhausted your ISA allowance and want to try some medium-term investments, you can start trading from your phone.

There are numerous mobile investment apps that can be used to start trading in stocks, some starting from only £1.

Some of the more popular investment apps available in the UK include:

These apps offer almost limitless options to invest small amounts of money. These options include:

Stock trading

  • ETFs
  • CFDs
  • Forex

Each of them offers different features for example Trading 212 offers stock trading, CFD trading and an ISA option.

Trading 212 also has a practice area where you can invest a virtual £50,000 before you start trading for real.

Trading 212 is also one of the easiest to get started with as you can start trading from only £1.

That’s not a recommendation, it’s just the one that I am most familiar with. For more information on Investment Apps, read here.

Small Investments In Stock Trading Apps In Summary:

  • Get started from £1 Per Month

Leave a comment