How much money do you need to start investing?

Years ago, investing was reserved for the privileged few who could afford to invest thousands. Luckily, things have changed since then – meaning that, today, people are able to enter the investment world regardless of how much they earn.

So, how much do you need to get started? Let's find out, shall we?

How much money should you have to invest?

When it comes to investing, there’s no right or wrong amount to get started, and typically the decision will depend on your financial situation and personal circumstances.

With it being normal for financial markets (and the value of your investments) to go up and down over time, investing for the long-term could potentially give you more time to ride out any dips you may experience along the way. So, you might want to consider if you're going to want to access the money you invest in the near future when deciding how much to put in.

And if you can’t afford to invest large lump sums, that’s fine. You don’t need a fortune to dip your toe in the investment world. Thanks to modern digital investment services, like Wealthify, it is possible to embark on your investment journey by putting in small amounts. In fact, with our Stocks and Shares ISA, General Investment Account, or Junior ISA (if you want to invest for your little one), you can start with as little as £1.

However, if you want to start a personal pension to save for your retirement, you will need to put in a minimum of £50 instead, either as a lump sum or monthly Direct Debit.

A personal pension (also called a 'Self-Invested Personal Pension' or 'SIPP') is a pension that you set up yourself and personally contribute to. This gives you more flexibility over how you invest for your future as you can pay into your pot as and when it suits you. A personal pension can also be used to supplement an existing workplace pension as you can have both at the same time.

And whether you can afford to invest £1 or £100,000, if you choose a Wealthify Plan, we'll do all the hard work for you (such as choosing your investments and managing them for you) so you can spend more time doing what you love.

With Wealthify, all you need to do is choose how much to invest and the investment style that suits your needs. Our investment team will then build you a diversified portfolio with just the right mix of investments and manage your plan on a regular basis.

And not only will they keep a close eye on financial markets, they’ll also make changes when needed, to help keep your investment plan on track.

What’s the best way to invest small sums?

Building up a decent nest egg when you can only afford to invest small amounts doesn't have to be mission impossible.

In fact, one option is to simply invest little and often without worrying about where financial markets are heading next - that way, your plan gets topped up regularly and you’re less exposed to short-term fluctuations in the markets, which can be caused by things like the news, economic and market trends, and global political affairs.

But that’s not all! Topping up your investment plan frequently (a technique that's commonly known as 'drip feeding'), could allow you to take advantage of the low prices of stocks during market storms. In other words, by investing regularly, you might be given an opportunity to grab cheap investments that could potentially increase in value if the markets go back up over time.

And if you want to drip feed without the hassle of having to do it manually, setting up a regular Direct Debit or standing order from your bank account to your investment plan could help.

However, although investing little and often could help boost the success your investment journey, if you want to maximise your potential returns, you may want to think about whether you can commit long-term. As we've already mentioned, remaining invested for a number of years could give you more time to recover from market dips, and your money more time to flourish and compound.

When you invest in the stock market, some companies will pay you 'dividends' – which are sums of money paid out of their profits. If, on top of your initial investment, you pay these dividends back into your plan so they can be reinvested, your money could potentially add up. And if you keep doing this over a number of years, your pot could grow further.

Let’s take an example. If you open a Stocks and Shares ISA, invest £200 a month and remain invested for five years, you could end up with about £12,883¹. But if you wait another five years, you could get £28,148² – that’s just over £15,000 more! So, it may be beneficial to try to be patient and give time a chance to do its work.

Wealthify makes investing accessible and affordable no matter how much you want to put in and how much you know about the stock market. Our team of investing experts will manage your Plan and make all the decisions for you, from choosing your investments, to keeping an eye on how they're performing and reacting to any changes in the markets. So, why not find out more about what we do?

The tax treatment depends on your individual circumstances and maybe subject to change in the future.

Please remember the value of your investments can go down as well as up, and you could get back less than invested.

Wealthify does not offer financial advice. Please seek financial advice if you're unsure about investing.

1. This is the projected value for a Confident Plan (Medium Risk Plan). This is only a forecast and is not a reliable indicator of future performance. If markets perform worse, your return could be £11,403. If markets perform better, your return could be £14,501. Values correct as of 15/12/22.
2. This is the projected value for a Confident Plan (Medium Risk Plan). This is only a forecast and is not a reliable indicator of future performance. If markets perform worse, your return could be £23,468. If markets perform better, your return could be £33,649. Values correct as of 15/12/22.