- Commission-free stock trades
- Receive dividend payments
- Invest in fractional shares
We all have to start somewhere. Investing £100 per month over the long term could lead to more wealth than you’d probably imagine. For example, a £100 monthly investment with a 7% yearly return could leave you with over £52,000 in 20 years or more than £180,000 in 35 years. But you’re probably wondering how to invest £100 on a monthly basis and what’s the best way to invest £100 per month as a UK investor.
Best ways to invest £100 per month
There’s a couple of ways to invest £100. Here’s some of the best ones:
- Index funds and ETFs
- Robo-advisor platforms
- Dividend-paying stocks
- Multi-asset funds
- Portfolio of shares
- Investing with a tax-efficient account
- 0% commission on trades
- Choose from 3000+ stocks
- Real-time live pricing
- Commission-free trading
- Invest in fractional shares
- Over 5,400 stocks & ETFs
1. Invest in index funds or ETFs
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 £100 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.
- Simple. With a single investment, you can get exposure to hundreds (and sometimes thousands) of stocks. It’s a straightforward way to put your £100 a month into the market.
- Cheap. The majority of passive ETFs should come with extremely low ongoing fees because no active management is involved. This allows you to get the maximum benefit from your £100 a month investment.
- Accessible. Most of the best trading apps and platforms should provide you access to popular ETFs and funds, meaning you can invest through a variety of providers.
- Variety of choice. There are loads of ETFs and index funds out there to choose from. You can invest in whole regions, sectors, or themes and build yourself a diverse portfolio.
- Pricing. Some ETFs will charge you more for what is essentially the exact same investment. So, you need to be on your toes and keep an eye on the prices to make your £100 per month go as far as possible.
- Lack of control. Although you get to pick your ETFs, you don’t get to choose what investments are included and excluded.
- Research. Investing in a single ETF likely won’t mean you’re perfectly diversified. You’ll still need to research which ETFs to hold for your investing strategy.
- Performance. Most index funds and passive ETFs track whole markets or benchmarks, this means you’ll never outperform the market with your £100 a month.
2. Robo-advisor platforms
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 £100 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.
- Straightforward. Once you’ve opened an account and chosen a portfolio, all you need to do is set up your regular £100 a month investment and your investments can (hopefully) grow without any extra effort on your part.
- Affordable. The cost to use a robo-advisor is pretty low these days and most use a percentage system. So you don’t have to worry about fees eating into your monthly £100 deposits.
- Ease of use. Because robo-advisors tend to be digital and app-based, the platforms are designed with user experience in mind to make it a pain-free event to put your money to work.
- Lack of choice. You often have only a small number of pre-made portfolios to choose from and you usually don’t get to choose the investments being held.
- Cost. Although robo-advisor fees are quite low, you’re still paying an added fee for the convenience of the platform. Most robo-advisors use cheap ETFs that you could invest your £100 in by yourself, for less.
- Limited learning. Investing with a robo-advisor is quite a hands-off experience. So you’re unlikely to become a more educated investor or learn as you spend more time investing.
3. Dividend-paying stocks
If you’re comfortable with the idea of picking a selection of stocks, investing £100 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.
- Investment options. You can pick your dividend-paying stocks and earn a passive income from a vast range of companies you want to invest your £100 a month into.
- Compounding. Investing your £100 a month into dividend stocks is an excellent way to benefit from the magic of compound interest.
- Stability. Many companies that pay dividends tend to come with a certain level of stability and there are lots of blue-chip stocks to choose from.
- Property ownership. If you want to own property and have £100 to invest each month, you might want to consider a real estate investment trust (REIT) that pays you income in the form of dividends.
- Lots of research. If you want to pick your dividend stocks, this can involve plenty of time and research finding the best options.
- No guarantees. Dividends are a way to reward shareholders when a company makes a profit and the payments aren’t guaranteed. Dividends can be cut, paused or stopped altogether.
- Lack of growth. Paying money out as dividends means companies have less money to invest in growth or share buybacks. Dividend stocks tend to grow at a slower rate (if at all). May not be the best choice if you want accelerating growth from your £100 a month investment.
4. Multi-asset funds
This is a somewhat similar option to robo-advisors for investing your £100 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).
- More flexibility than a robo-advisor. If you want to use a model multi-asset portfolio for your £100 a month but want to be more actively involved, this way you can be more flexible.
- Diversified. Using a variety of assets provides you with more diversification so that you don’t have all your eggs in one basket. Asset variety means you can better manage the volatility of your £100 a month investment.
- Simplicity. The great thing about this type of investment is that you get the benefits of diversification while only needing to make one investment with your £100 each month.
- Researching the right fund. The flipside of having more control is that you need to research and pick a fund that suits your investing approach. This can be tough if you’re a beginner.
- Fewer platforms. Not every investing platform offers multi-asset funds, so this may limit your options when it comes to picking a provider.
- Too much diversification. Diversity is important, but if you’re investing a smaller sum like £100 a month, you don’t want to spread yourself too thin across too many assets, because this may limit your growth potential.
5. Pick a portfolio of shares
If you want to be heavily involved with your monthly £100 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.
- Possibility of greater gains. One of the best things about choosing your own shares with £100 a month is that you have the potential to make outsized gains if you invest in the right stocks.
- Complete control. Picking your own portfolio means that you get to decide exactly which companies you invest in, and the ones you want to avoid with a barge pole.
- Low cost. Individual stocks don’t come with ongoing costs like funds, ETFs and robo-advisors. Also, if you use a platform with 0% commission, you can avoid spending part of your £100 a month on trading commissions.
- Time-consuming. Picking your own portfolio of stocks can take a lot of time to build, and then more time to manage your investments and keep on top of it all. No one is going to do this part for you.
- Expensive without the right platform. If you don’t use a platform with low (or no) trading commissions, you could end up forfeiting a chunk of your £100 each month just to cover these fees.
- Greater risk potential. Although there’s the possibility of higher rewards when picking your own portfolio, the flipside to this is that this can be a riskier option for your £100.
- Fractional shares. If you’re investing only £100 a month, you may need to use a platform that allows you to buy fractional shares (not all of them do).
6. Invest with a tax-efficient account
Ideally, you should use a stocks and shares ISA whatever way you decide to invest your £100 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.
- Bonus money. Getting a minimum boost of 20% to 25% with a LISA or a SIPP is an attractive option because it means you can immediately turn your £100 a month into £120 to £125 with no effort on your part. The fact that stocks and shares ISAs protect your investments from tax also means not having to pay tax in future, meaning more money left for you.
- Tax advantages. Along with government top-ups for LISAs and SIPPs, your investments can grow free of a tax burden. With a stocks and shares ISA, not only can your £100 a month investment grow without tax, but money withdrawn doesn’t count towards your yearly income when you start using funds.
- Plenty of options. There are now more options than ever of excellent providers offering stocks and shares ISAs, SIPPs and LISAs. More providers makes it more likely to find the best account with the investments you want.
- More complex. The UK tax system can be changed by the government and sometimes there are a lot of rules to wrap your head around. So it takes a bit of time and effort to be aware of everything.
- Restrictions and penalties. With a SIPP, you can’t access any of your investments until you reach 55 (rising to 57 in 2028). With a LISA, you can only use your £100 a month investment towards your first home or for retirement. If you want to access your LISA for anything else, you’ll end up paying a penalty.
- Limitations. Depending on the provider you use, there may be limitations on the investments you can choose or the amount you can invest. Although, £100 a month should be enough for most accounts. Also not every provider offers SIPPs, LISAs or stocks and shares ISAs.
How to invest £100
Before you start thinking about investing your £100, 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 how to invest with little money, like £100 a month:
- Decide on the best way to invest. The best way to invest £100 a month will depend on your circumstances and goals. So think about what method best suits your needs.
- Create an investing account. To start investing your £100 on a monthly basis, you’ll need to open a trading account with an investment platform. How you plan on investing your £100 may help narrow down the right provider to use.
- Choose your investments. After deciding how you want to put your £100 to work, you need to find the investments on your platform.
- Set up a monthly investing plan. The best way to automate your £100 a month investment is to create a regular investment plan (some platforms even give you discounts on commissions for doing this).
- Monitor and adjust when needed. Once your £100 monthly investment is up and running like clockwork, you can let it keep ticking over in the background and only change if your circumstances alter. If you’re investing with a more active approach, you may need to be more hands-on.
To get a better idea of how various investments perform over time, check out this graph showing how various strategies can compare.
The risks of investing a £100 monthly amount
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 £100 a month:
- If you pick high-risk investments, you could lose significant amounts of your £100.
- Getting help or guidance for investing your £100 could cost you more in fees.
- If you don’t pick the right platform, you might end up paying a big chunk of your £100 towards fees or commissions each month.
- Certain accounts may require you to invest more than £100 a month (although this is rare).
- You should be happy tying up your money for at least 5 years, so don’t use funds you need to access easily.
- With a smaller amount of money, you might be tempted to take on more risk but it’s better to start small and be consistent than reach for unrealistic gains.
Investing any amount of money is an excellent way to start building wealth for your future self. Once the rest of your finances are sitting pretty, if you have £100 a month to invest, this gives you plenty of options and opportunities.
Whatever way you choose to invest your £100 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 realistically about how much time and effort you want to put in and this will help narrow down the best way for you to invest £100 per month.
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