How To Start Investing With Any Budget UK

Start Investing With Any Budget In The UK

Leaving your money sitting in the bank is not a good idea. You need to start investing. Whilst you may have a few hundred or thousand sitting in the bank. It is not working for you. Having said that if you do have savings already then you are off to a good start and better of than most.

So, instead of that money sitting in the bank earning virtually zero interest you want to make your money work for you.

What I mean by this is to start investing. I hear you, isn’t investing dangerous? Can I not lose all my money?

Theses are obvious concerns and concerns that I once had too. Hopefully, your concerns will be addressed in this article.

Fear not. Investing is not as scary as you may perceive it to be. In fact, for me it has become the opposite. No longer do I waste my hard earned money on things that are totally a waste of money and time. Now I buy only things that I truly will get use out of or that I actually need and not just want.

My mindset and ideas about money have completely changed since I started investing.

Doing so has allowed me to start investing a decent amount of money each and every payday. For me, that means every month.

Emergency Fund

Before you begin starting to invest however, you should always build an emergency fund.

An emergency fund should be at least 3 months but ideally 6 months of expenses. This includes all essential monthly bills and to be safe your non- essential ones too. Having an emergency fund in place before you start investing will put your mind at ease. Not only this if you have any unexpected expenses crop up or your job suddenly becomes less secure you have 3-6 months expenditure covered.

During this time you have a buffer to fall back on. Allowing you to find a more secure job. Whatever the reason you needed to dip into funds does not matter, what matters is you have the fund to start with.

Once you have dipped into the fund, it should be topped back up as soon as possible to give yourself the full buffer once again.

Start Investing with an ETF

To get started investing it is always recommended to start simple with a broad market ETF. An ETF is an exchange-traded fund that is traded on the stock market.

A prime example of probably the most popular ETF would be Vanguards S&P 500 index tracker. Ticker symbol VUSA (click the link for up to date information on VUSA) for the UK Market or VOO for the US Market.

What these ETFs will do is track very closely the S&P500 as a whole.

The idea is that even if some companies are doing badly others will be doing well. It gives you some security and diversity all rolled into one neat little package. Not only this the fees are exceptionally low at just 0.07% for VUSA in the UK.

With fees this low it should not even be of any concern to you.

For example on average over the last 100 years, the S&P500 has returned around 7% a year accounting for inflation or 10% if we do not take inflation into account.

The stated 7% is with dividends re-invested. VUSA and VOO pay a quarterly dividend, that should be re-invested to compound your returns faster. Compare this figure to your bank account or even a fixed term cash ISA and you can see why investing is the sensible choice and not the dangerous one many people think it is.

Really, it is only when people try and pick and choose individual stocks people get in trouble. In an attempt to make some quick money it often goes wrong.

Sticking to a broad market ETF will keep things simple and give you some built-in diversity.

Vanguard vs Trading 212

When I started my investing journey like many others I started with Vanguard.

Vanguard is great but has a few limitations.

  • Minimum of £100 a month direct debit
  • Lump-sum of £500 per investment
  • No fractional shares
  • Having to wait a day or two for deposits to show in the account
  • Unit of the ETF are purchased at the end of each day

By having these restrictions they are alienating investors who do not have £100 a month to commit. On top of that, the waiting times for deposit and purchases just becomes a little annoying.

Once a dividend is paid, because they do not have fractional shares you can not re-invest straight away. Unless you have a substantial portfolio and the dividends are enough to meet the above requirements.

I soon switched to Trading 212 for a couple of reasons.

I wanted to get into dividend investing and have a little more control. To be able to generate monthly income via dividends. See HERE.

Not only this but the very same Vanguard ETFs can be purchased within Trading 212 without the above strict requirements. A single share can be purchased instantly with zero fees and thanks to fractional shares up to 0.001 of a share can be purchased.

Using Trading 212 also means an Investor can start investing from as little as £1 instead of £100. Buying a fractional share and being entitled to a fractional dividend based on how many shares you have.

When dividends are paid through Trading 212 – Those dividends can be instantly re-invested to compound your returns at a faster rate.

Trading 212 Free Share

Do you want to get a free stock share worth up to £100?

Create a Trading 212 Invest account using this link and we both get a free share!

If like me you become more interested then please do your own research into each company. Most importantly I am not a financial advisor. I am just sharing my experiences. Above all always seek professional advice if you have any concerns.


Sean C

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