So, you’ve built up a £1,000 monthly investing budget, incredible stuff. Investing £1,000 per month over the long term could lead to more wealth than you’d probably imagine. For example, a £1,000 monthly investment with a 7% yearly return could leave you with over £520,000 in 20 years or an eye-watering £1.8 million in 35 years.
This all might sound exciting, but you’re probably wondering how to invest £1,000 on a monthly basis and what’s the best way of investing £1k per month.
There are a couple of questions you should ask yourself before you decide what to do.
There’s no perfect way to invest any amount of money. It all comes down to your goals, risk appetite and time horizon. But if you’re looking for some inspiration, here are 6 ways to invest £1,000 a month that you may want to consider.
This is one of the best options for beginner investors, or any level of experience for that matter. If you’re not aware of how these investments work, you should check out our guides on investing in index funds and exchange-traded funds (ETFs).
You can use an index fund or ETF and invest your £1,000 a month like clockwork. Ideally, it’s often best to look at broad-market tracker funds. This way, you can invest in UK shares with a fund that copies an index like the FTSE 100, or invest in the US stock market with a fund that tracks the S&P 500 index.
If you’re new to the world of investing, you may want to consider using a robo-advisor platform. These platforms don’t provide advice, but they do help you pick a suitable pre-made portfolio for your £1,000 a month based on your goals and risk appetite. There are now a bunch of great robo-advisor apps and platforms to choose from with competitive fees.
If you’re comfortable with the idea of picking a selection of stocks, investing £1,000 a month into stocks that pay dividends can be a great way to build yourself a passive income stream. If you want to invest in dividend stocks, it will take some research and patience, but it’s a time-proven strategy to benefit from compound interest.
This is a somewhat similar option to robo-advisors for investing your £1,000 each month, but with a key difference. A multi-asset fund contains a variety of assets (not just stocks) and the main benefit of this option is choice. Picking your own fund means you get a straightforward investing approach, but also greater control over what you’re invested in (instead of just being assigned a portfolio).
If you want to be heavily involved with your monthly £1,000 investment, you may want to think about building your own portfolio of shares from scratch. Buying shares will take a decent amount of research and legwork on your part, but it can be extremely rewarding – in terms of enjoyment and profit.
Ideally, you should use a stocks and shares ISA whatever way you decide to invest your £1,000 a month. But, there are other tax-efficient options to consider. If you invest using a lifetime ISA (LISA), you’ll get an immediate 25% bonus from the government. This beats most gains you’d likely make during a year of investing. Or if you use a self-invested personal pension (SIPP), you’ll get tax relief, which means a government top-up of at least 20% on your investment.
Before you start thinking about investing your £1,000, it’s important to get yourself set up with an emergency fund and make sure the rest of your finances are looking healthy. If you owe money on a credit card, you’re most likely better off paying down that debt before you invest.
If you’ve got your personal finances under control and you’re looking to put away some funds for the future (at least 5 years), here’s a step-by-guide for investing £1,000 a month:
To get a better idea of how various investments perform over time, check out this graph showing how various strategies can compare.
Investing any amount of money comes with a certain level of risk. Here’s a summary of the key things to be aware of when investing £1,000 a month:
"Without sounding like a broken record, this depends on your goals and risk appetites. However, if you’re looking to invest £1,000 a month, it can be best to keep things simple and make your money go further.
One of the best ways to do this is make use of a tax-efficient account and stick with a simple, low-cost investment for your £1,000 each month like a global equity fund or ETF that invests in businesses of all sizes from every corner of the world."
Investing any amount of money is an excellent way to start building wealth and get that snowball rolling. Once the rest of your finances are sitting pretty, if you have £1,000 a month to invest, this opens up pretty much every type of investment you can think of.
Whatever way you choose to invest your £1,000 per month, it’s worth using a tax wrapper. A stocks and shares ISA gives you the most flexibility, but a LISA or SIPP means a government bonus. Make sure you think properly about how much time and effort you want to put into your investments and this will help pinpoint the best way for you to invest £1,000 per month.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
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