A £1,000 investment is a significant step into the world of investing, but how could you invest it, where could you start, and how could you make the most of it?
Here are some smart ways you could consider investing if you have a spare £1,000 lying around.
Consider opening a Stocks and Shares ISA
If you want to invest £1,000, it could be a good idea to do it tax-efficiently. How do you do this, you ask? Well, opening a Stocks and Shares ISA (like the one we offer) could help.
Introduced in 1999 by the UK government, Stocks and Shares ISAs (also known as Investment ISAs) let you invest in a tax-friendly way. In other words, you don’t need to pay tax on any gains you make, meaning you'll get to keep more of your returns.
One thing to keep in mind though is that the amount you can put in a Stocks & Shares ISA is limited. As of the 2023/24 tax year, you can invest up to £20,000 per year (though this could be subject to change in future). This is your ISA allowance and each year, you have until midnight on 5th April to use it before it resets and you get a fresh new one. And one thing to keep in mind is that any unused allowance can't be carried over into the new tax year.
If you’re planning on investing £1,000, it could be worth doing this though an ISA to remove tax from the equation and maximise your potential returns. Though don't forget that you may need to pay fees to your ISA provider. Find out more about our fees.
Make your investment plan ethical if you want to
Whether you put your money in a Stocks and Shares ISA or a General Investment Account (which is typically used to invest outside of your annual ISA allowance), it could be a good idea to make your investment plan 'ethical'. And at Wealthify, you have the option to do this with our Ethical Plans.
If you choose this option, your money will only be invested in organisations that are trying to do good in various ways – whether that's by being eco-friendly or supporting their local community.
Plus, we’ll also aim to exclude harmful industries from your Ethical Plan, such as tobacco, gambling, weapons and adult entertainment.
Try to stick with your investments over the long-term
If you want to make the most of your £1,000 investment, then you might want to think 'long-term'. Time is your friend as an investor, and staying invested for a number of years could be key when it comes to building wealth over time.
Why, you ask? The answer is simple: the longer you remain invested, the better the chance you could have of seeing positive growth. Not only is this because you could be giving your investments more time to recover from market dips (which are normal to experience as an investor as stock markets go up and down), but this is also due to the power of 'compounding'.
When you invest in companies, you could be enjoying some of their profits in the form of 'dividends'. But the magic happens when these dividends are reinvested. Every time you put your earnings back into your Investment Plan, they have the potential to earn their own gains – meaning your money could add up, and you could benefit from a nice boost.
Let’s take an example to show you the wonders of compounding. Say you put your £1,000 in a Stocks and Shares ISA and remained invested for 15 years. After that period of time, you could end up with a total of £1,785.1
But now, let’s imagine you hold onto your investments for 30 years instead. This final sum could look very different as you could end up with £2,698.2
Make the most of digital investment platforms
Investing £1,000 can seem daunting, but it doesn’t have to be. With digital investment services, like Wealthify, getting started has never been easier. All you need to do is choose how much to invest and the risk level you’re comfortable taking. We’ll do the rest, from picking your investments to managing your Plan on an ongoing basis. And it doesn’t stop there! You’ll be in control. Not only will you be able to check how your investments are doing at anytime, anywhere, you’ll also have the possibility to boost your Plan with monthly top-ups.
1: This is the projected value for a Confident Plan (Medium Risk Plan) with an Original theme. This is only a forecast and is not a reliable indicator of future performance. If markets perform worse, your return could be £1,146. If markets perform better, your return could be £2,638. Values correct as of 25/07/23.
2: This is the projected value for a Confident Plan (Medium Risk Plan) with an Original theme. This is only a forecast and is not a reliable indicator of future performance. If markets perform worse, your return could be £1,313. If markets perform better, your return could be £5,898. Values correct as of 25/07/23.
The tax treatment depends on your individual circumstances and may be 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 provide financial advice. Seek financial advice if you are unsure about investing.