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How to start investing with a lower income

Being on a lower income shouldn’t prevent you from investing. Here are some tips to help you get started, even with little money.
How to start investing with a lower income
Reading time: 5 mins

According to our own research, 30% of Brits think they don’t have enough money to enter the investment arena1. This belief may have been true in the past when you needed thousands to become an investor. But in today’s digital age, such conviction is nothing more than a myth. Thanks to online investing platforms, like Wealthify, it’s now possible to dip your toe in the investment world even with little money. If you’re on a lower income, here are some nifty tips to help you start investing.


Is investing right for you?
Being on a lower income shouldn’t stop you from giving investing a go. However, it may be a good idea to review your financial situation before embarking on your investment journey. If you have debts and few savings, you may want to consider if it's the right time to invest. In fact, if you’re struggling financially, the first thing you want to consider is getting your finances back on track. You could review your expenses and draw up a budget to help you reduce your spending. On the other hand, if you’ve developed healthy saving habits and have a decent emergency fund, investing could be something to consider. But before you commit to anything, it’s important to plan ahead so you can make the most of your investment journey. The first thing you could do is decide how much you want to invest. It’s also a good idea to consider the level of risk you’re happy and comfortable taking.


3 ways to help you invest with a lower income
Consider investing little and often
Building a nest egg for the future when you can only afford to invest small amounts of money isn’t as hard as you might think. If you’re looking to accumulate wealth, drip feeding could help. But what is ‘drip feeding’? It’s simply the practice of investing small sums regularly without looking at market fluctuations. By investing little and often, not only are you feeding your plan on a regular basis, but your investments will also be less exposed to short-term market movements. And that’s not all! When financial markets fall, drip feeding could help you take advantage of the situation as it allows you to grab cheap investments that could potentially rise in value once the storm passes.

If you’re still not convinced by the power of drip feeding, here’s an example to show you how it could help your money grow. Let’s say you can only afford to invest £50 a month. You open a Stocks and Shares ISA and start depositing money. After 10 years, you could end up with about £7,0162 – quite a decent pot.


Remain invested over the long-term
Investing small sums could be a good way to build up wealth as long as you’re willing to be in the game for a while. When you invest, time is on your side and it’s important to let it work its magic. Typically, the longer you remain invested, the greater chance you have to make a gain. For instance, people who invested in the FTSE 100 and stayed on the ship for any 10-year period, between 1986 and August 2019, have had an 89% chance of making a positive return3. Of course, as an investor, you’ll likely experience some bumps over the short-term, and you might even see some of your investments go down in value. But try not to panic, selling your investments will only make your losses real, and you might miss out on some potential growth when days become brighter. Instead, take a deep breath and try to stay on the journey as long as you can.


Consider investing with robo-investing platforms
If you’ve decided to invest small amounts, there are many routes you could take. You could do it yourself and pick your own investments via a DIY platform. However, if you’re too busy or don’t feel confident enough to do the investing on your own, it could be worth having a look at robo-investing platforms. Online investment services, like Wealthify, let you invest as little as you like and will do the hard work for you, including building and managing your investment plan – that way, you’ve got more time to do the things you love.


1: Wealthify ISA survey. Research conducted by Opinium Research between 9– 12 March 2018 amongst 2,010 consumers

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 £5,839. If markets perform better, your return could be £8,376. Values correct as of 17/10/19.

3: Data from Bloomberg


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

Past performance is not a reliable indicator of future results.

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

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