5 Best Ways To Invest £1,000
£1,000 — I remember the thrill I experienced when my bank account first showed this value. At age 14, my first job was at my local pub where I was a waiter and washed dishes, and upon looking back, this experience taught me the true value of time and money.
Now, as a teenager, I had no idea about the myriad ways you can now start investing. Growing up, I envisioned investing as a scary world of red and green numbers and the cacophony of the bull pit of the stock exchange. I could not be more wrong.
So, how should you start investing with £1,000 (or less!) without worry?
1. Invest In A Pension
By far, one of the most sensible investments you can make is into a pension plan. A Self-Invested Pension Plan (SIPP) is a pension ‘wrapper’ that holds investments until you retire.
With standard personal pension schemes (upon joining a company, you’ll most likely join their standard plan), your investments are managed for you. SIPPs give you the freedom to choose and manage your own investments.
Key points to a Self-Invested Pension Plan:
- SIPPs are tax-free accounts. This means you can get a tax rebate every time you pay into it from your monthly income. (Therefore, thanks to this rebate, you’ll pay less tax overall)
- Most SIPPs allow you to choose from a wide range of assets, such as, shares, cash, exchange traded funds (ETFs), Government securities, insurance company funds.
- You cannot touch any money you put into a SIPP until you retire. This may sound daunting but your future-self will thank you.
- Critically — if you pass away, your SIPP will be passed onto your beneficiaries tax-free!
2. Invest In Education
Education is one of the most important foundations in your life. Education provides you with the tools and knowledge to open new doors in your career and to develop personally.
I wish I could travel back in time and grab my naive teenager-self by the shoulders and shout to the rafters about investing in my education.
You could invest in books, languages, specialist courses, online certificates.
In today’s world, with thousands of university graduates trying to enter the workforce for a very limited number of jobs, your early investment in education will provide you with the chances you need to succeed in your career.
If university is not your thing, then consider investing in apprenticeships, online courses or the education required for a new trade. The time and money spent here will be incredibly valuable for your future self.
3. Invest In A Side Hustle
Investing in something you love is by far the best way to spend your £1,000. If you have a passion, you should strive to make it your job as Mark Twain said:
“Find a job you enjoy doing, and you will never have to work a day in your life.”
This could be video game streaming on Twitch, writing a blog, creating short courses on SkillShare, or starting a podcast. If you’re scared or feeling overwhelmed, my advice would be to just start! It doesn’t matter if nobody reads, listens, or watches what you produce…
Whatever it may be — whatever excites you — you should pursue it with all your efforts.
4. Invest In An Index Fund
As you may be thinking about investing for the first time, the best option is to go for an index fund. When you buy an index fund, you get a diversified selection of securities in one easy, low-cost investment. For example, you may invest in a technology fund that contains shares in Facebook, Twitter, YouTube, etc.
Investing in an index fund will give you the chance to:
- Preserve your capital
- Diversify your portfolio (your investments)
- Achieve growth while keeping costs low
5. Invest In Paying Down Your Debt
If you find yourself in the position with high-interest debt, then paying this off using the £1,000 is by far the most sensible option.
Having debt is the opposite of an investment. Holding onto debt is more costly than investments are profitable! This is why paying off debts is clearly a smart idea as what you’re investing in is not having to pay lots of interest.
If you’ve just signed a mortgage for a house, then this is why paying down the debt on your mortgage could leap frog you into financial independence.
If you’ve made it this far, then thank you very much, I really do appreciate it. It obviously means you care about your money and are invested (see what I did there?) in making the right decisions.
£1,000 might not be a lot to some people but starting small will guide you onto bountiful rewards in your future life. Investing in your education, pension, index fund, or a business you love, will give you so much more satisfaction then buying the latest gadgets or clothes.
Now, I am not a professional financial advisor so before you dive into investing, please do the research and think over all your options. Speak to Mum or Dad, read the plethora of information available on the internet — it’s important.
On a final note — “Invest today for a better tomorrow!”