Are you wondering where you can invest a small amount of money in the UK? When money is rarer than rocking horse dung, DIY investing can feel like the sport of kings – something akin to international polo, yacht racing, or panda wrestling.
Read on to discover your best options for investing £25 per month or less using budget-friendly brokers.
Disclosure: Links to platforms may be affiliate links, where we may earn a small commission. It doesn’t affect the price you pay nor how we judge the brokers.
What’s the smallest amount of money you need to invest?
You can invest in a portfolio of ETFs from just £10 a month with InvestEngine. (Though you need £100 to open an account in the first place.)
InvestEngine’s big attraction is that your money won’t be molested by the gang of brokerage fees that usually lie in wait for unsuspecting investors.
There are no platform charges, trading costs, or FX fees to worry about – just so long as you stick to the DIY investment service.
Brilliantly, you can also activate the AutoInvest feature. This will automatically spread your money between your chosen ETFs in line with your asset allocation.
AutoInvest enables you to build a highly-diversified investment portfolio for a tenner using InvestEngine’s Savings Plan.
Note, the plan uses Variable Recurring Payments to tickle your bank when the money’s due.
If your account doesn’t support open banking then you can set up a Direct Debit instead.
In that case, the smallest amount of money you can invest with InvestEngine is £50 per month.
There are a couple of other snags to watch out for.
Firstly, InvestEngine doesn’t offer a SIPP account yet. SIPPs are pension accounts that typically beat a stocks and shares ISA as the best place to save for your retirement.
Also note that a £10 a month contribution split between multiple ETFs is likely to involve purchasing fractional shares. This may lead to problems further down the line with ISA accounts. (We will attack this can of worms with our investigative tin-opener in a moment).
Our next option avoids all that palaver…
Where to invest a small amount of money into a SIPP and/or mutual funds
Fidelity offers the best deal if you want to invest a small amount into a SIPP or use mutual funds (which heads off the fractional share dilemma).
Fidelity’s Monthly Savings Plan enables you to invest a minimum of:
- £20 per month into a SIPP (you should get £5 tax-relief on top, too)
- £25 into a stocks and shares ISA or General Investment Account (GIA)
Fidelity’s platform fee is 0.35%. That’ll cost you £3.50 per year for every £1,000 invested. You can avoid trading costs by sticking to funds instead of ETFs or shares.
The minimum investment amounts above apply per fund, per month.
So you’d need to invest £40 to £50 monthly in a two-fund portfolio.
Happily, you can diversify in a one-er by investing in a multi-asset fund like Vanguard LifeStrategy.
Multi-asset funds bundle up multiple asset classes into a single package. This makes them an ideal way to invest a low amount of money.
Where to invest a small amount of money into a LISA
Dodl by AJ Bell allows you to invest from £25 per month into a Lifetime ISA (also known as a LISA).
You’ll pay a 0.15% platform fee with a minimum charge of £12 per account, no matter how small your portfolio’s balance.
Dodl’s combo of low platform charge, flat-fee baseline, and zero trading costs means it beats Fidelity once your investments are worth more than £3,428 in any account – ISA, GIA, or SIPP.
Dodl’s downside is its limited range of funds and ETFs.
Other minimum investment options
Technically, Trading 212 is the place to go to invest the smallest amount of money required by any UK broker.
It will let you stake £1 a throw with zero trading fees and no platform charges to boot. You can invest in ETFs with Trading 212, even though the emphasis is on shares and more exotic instruments.
That said, we believe most investors are better off with a passive investing strategy built around index funds and ETFs. This is the best way by far to diversify your portfolio on a budget.
Freetrade’s minimum trade is £2 a pop. Stick to its GIA though. Both the ISA and SIPP accounts come with sizeable annual costs attached.
Finally, Wombat lets you invest from £10 per month. The money marsupial is even cheaper than Dodl (0.1% vs 0.15% platform fee), and also beats Fidelity when your portfolio is valued over £3,428.
The drawback is a product range smaller than a celeb chef’s set menu. And no SIPP.
Wherever you choose to invest, you can check out the fees for all the major UK investment platforms on our broker comparison table.
Look out for a broker’s ‘regular investing’ option to take advantage of its minimum investment amount.
You’ll typically have to pony up more to invest occasional lump sums.
Trading 212 and Freetrade are notable exceptions. You can invest tiny ad hoc amounts with them, without committing to a monthly schedule.
Fractional shares snag
When investing small amounts of money in the UK, watch out for the share price of your chosen vehicle.
You won’t be able to buy in if the cost of a single share is higher than your contribution. Not unless your platform allows fractional investing.
Fractional investing is always available for mutual funds. That makes them much simpler to trade if you’re on a budget.
But only a handful of investment platforms offer fractional shares for individual stocks.
And InvestEngine is the only UK broker we know of that offers ETF fractional investing.
Happily, there are so many ETFs on the market, you’ll often be able to find a low share price option even if you’re investing £25 a month or less. (A low share price ETF is not worth less than a high share price equivalent. Don’t worry about that at all.)
Less happily, if you go down the fractional share route you should know HMRC has recently cast doubt about whether this is permissible within an ISA account.
Fractional shares in an ISA SNAFU
HMRC has stated that fractional shares are not eligible ISA investments.
The announcement came as a big surprise to the brokers that have been merrily offering fractional shares in ISAs – and continue to do so.
Indeed, those platforms are sticking to their guns so far. Some are even threatening HMRC with lawyers at dawn if the taxman cracks down.
To cut a tedious story short: the ISA vs fractional shares situation is far from resolved.
If HMRC pursues the matter then you could be liable for a capital gains and dividend income tax bill.
True, you’d have to earn over £1,000 in dividends per tax year before you owed a penny thanks to the dividend allowance.1
Similarly, you’d have to make over £6,000 in capital gains in 2023-24 – or over £3,000 from the tax year 2024-25 – before you’re likely to get mixed up in any costly fractional share repercussions.
In other words, you’ve got plenty of tax allowance headroom if you’re buying fractional shares for the amounts we’ve been discussing in this article.
But we’re flagging the problem now because your investment contributions are likely to snowball as you progress through your career.
Thankfully this ISA imbroglio does not apply to fractional investing in mutual funds. That’s because they offer fractional units and not shares.
Makes total sense, doesn’t it?
The Pound Stretcher portfolio
Turning, then, to funds, if you’re wondering where to invest a low amount of money in terms of funds or ETFs then the simplest solution is to choose a Vanguard LifeStrategy fund.
Because Vanguard LifeStrategy is a mutual fund, you won’t incur trading costs with any of our broker picks above. You can also invest in fractional units without any HMRC entanglements.
As for ETFs, multi-asset ETFs are a rare beast in the UK, although BlackRock offers an ESG range.
However my ETF preference would be to DIY diversify with a brace of index trackers that could sit at the heart of any portfolio:
ETF 1: 60% Global equity
- For example: L&G Global Equity ETF (LGGG), OCF 0.1%.
- A diversified, large- and mid-cap index tracker that represents a broad slice of the developed world equity market and can be expected to provide growth over the long term.
ETF 2: 40% UK Gilts
- For example: iShares Core UK Gilts (IGLT), OCF 0.07%.
- An intermediate UK government bond index tracker that should reduce portfolio volatility over time and diversifies against the threat of a stock market crash.
I’ve chosen this pair of bargain basement beauties because they balance a keen Ongoing Fund Charge (OCF) with a low share price.
But we have written about other low-cost index funds and ETFs too.
Risk versus reward for newbies
The classic 60/40 asset allocation mix I’ve suggested above is for illustration purposes only.
If you’re just starting out, are relatively young, and have a strong risk tolerance (or are teaching the kids about investing) then you could consider a 100% equities portfolio using the global ETF only.
Beware: an equity-only portfolio will be a much wilder proposition without the calming effect of partnering it with government bonds.
But you may find such volatility easier to stomach when you’ve only relatively small amounts of money at stake, and plenty of years ahead to make good any losses.
You don’t? Diversify your portfolio with a large slug of bonds if 100% equities proves too stressful.
See our investment portfolio examples for a deeper dive into asset allocation.
From small acorns
The power of compound interest makes it worth your while to start investing sooner rather than later, even when cash is tight.
Plus, you’ll bed in good habits, learn about portfolio management, and make your mistakes while you have less skin in the game.
All that said, while it’s worth knowing where to invest a small amount of money in the UK, you’ll achieve your objectives faster by saving and investing more.
But that can wait until you’re good and ready. Just get started!
Take it steady,
The Accumulator
- Though the allowance reduces to £500 from April 2024. [↩]
All good stuff. Probably worth ensuring that if money is that tight, make sure you are getting all employer match for a workplace pension first, as free money has the edge on almost anything else, even if their fund is suboptimal.
> over £1,000 in dividends per tax year before you owned a penny thanks to
prob should be owed [HMRC] a penny…
@ermine — It certainly should be. Fixed now, thanks!
@all — Interesting so very few comments. The original 2012 article this article replaced was followed by one of our first truly lively discussions. Have we cultivated too advanced an audience now, or is the general public just much better informed about cheap passive investing?
(I deleted the original comments, which I rarely do, because 90% of them (including mine) were now out-of-date references about fund/broker specifics (TERs, charges etc) from a 2012 perspective…)
Re: Invest Engine – do you not have to open an account with an initial £100 deposit before you can create a Saving Plan?
Re: Dodl by AJ Bell
They have a pension product which seems to be a SIPP, unless I am mistaken?
Re the HMRC tax issue.
“Thankfully this ISA imbroglio does not apply to fractional investing in mutual funds. That’s because they offer fractional units and not shares.
Makes total sense, doesn’t it? “
In one sense, yes. In the case of the ETF, it must be the case that the platform own the ETF share and – on their system – allocate the ‘purchased’ fraction to your account. Legally, there is only ever one share and so HMRC take the view that the ownership is retained by the platform. By contrast, because mutual funds issue part-units at source, the ownership is with the investor.
Probably needs a legal test case to determine whether the platforms’ actions constitute a sufficient transfer of ownership of the ETF fractional unit.
There are so few comments because of the readership of this blog is it old and wealthy
You want comments write about any one of: brexit; inheritance tax; wealth tax
InvestEngine must make money somewhere. All the hype about zero fees charged by them – I mean are they in business just for the good of their health/do their staff work for free? It smells of the old “too good to be true” scenario to me and warnings to keep away from them.
I haven’t looked into it but figure they must be making it in hidden charges somewhere down the line – dealing spreads or the like possibly? Most investors will be DIY, not managed, I would have thought so can’t see that managed portfolios would cross subsidise DIY to enough of an extent for them to make profit. Unless someone can enlighten me as to how they do it? I mean I don’t know what profit they make but if they are not making much then that is a bit of an alarm bell to me in that most long established ones are and low profits wouldn’t seem compatible with their longevity/customer protection.
Also I have found that where some brokers have lower charges they also have a quite restricted range of funds, particularly hardly any global passives and those with lower fund charges say (<0.25%) and mainly have expensive actives. So what you might save in broker fees you end up paying in higher fund fees. (Not sure if this is case with IE though as not really looked at their range – I'm not particularly tempted by them.)
Also you have to bear in mind the increased risk with ETF's with no FSCS on them and from what I can see very limited other protection, if any with many of them.
@ Garrie & Jame – thank you both! My mistake, have updated the post in line with your corrections.
@ AS – You raise some interesting points which are always worth debating… Here’s a post I wrote on how zero commission brokers make money:
https://monevator.com/how-do-zero-commission-brokers-make-money/
Highly plausible that spreads could be slightly higher for some ETFs on InvestEngine but you’d need to test it. The less you trade, the less of a concern it’d be.
Obvs, you should always check if a broker stocks the investments you wish to use, or whether you can live with the alternatives available. InvestEngine have a pretty good range and it’s improved over time. Not as good as an AJ Bell for example but that’s not the point of the article.
I don’t agree there’s a correlation between low price brokers and a restricted range of passives, though. Generally, I think it depends on the part of the market the broker aims to serve. Dodl and Wombat specifically limit choice in order to make things simpler for their customers.
Personally, I don’t worry about FSCS protection on investments as opposed to brokers. FSCS protection for funds only applies to authorised providers’ funds that are domiciled in the UK. I’d rather not limit myself to such a narrow range of products when I balance that opportunity cost versus the unlikelihood of a Vanguard or Blackrock going bust without me being able to recover my assets. I appreciate it’s a personal thing. I’m just making the case for not being overly concerned about the FSCS except at the broker level.
Still, you’ve got me thinking now… I wonder just how satisfactory a range of portfolios I can build by purely limiting myself to passive funds with FSCS protection? Think I’ll do a post on that as quite a few readers would prefer to have the reassurance. Cheers!
If I could suggest, tweaking the title to “Where to Start Investing as Little as £25/Month” would be helpful to those who think they need five or six figures to start.
@mr_jetlag – I wouldn’t say we love the title either, but it’s ugly for SEO reasons. The hope is it’ll bring more newbie people to the article (as this is the sort of thing they type into Google) and then they can take it from there.
Thanks for this post. Its a great help, as I am thinking at some point in future I will contribute small amounts regularly to new pensions for offspring. A good start for them (they will have separate pensions through their employers, of course, though these may not be the most cost effective in terms of charges etc).
@TA: thank you for another excellent piece. I don’t know how @TI and you manage to create such exceptionally high quality output without fail 125+ times p.a. You put my work productivity to shame.
A query on the L&G Global Equity ETF (LGGG) if I may (and my apols for not having looked into this, as the answer may already be elsewhere on Monevator): does this ETF differ from most other ‘all in one’ global equity trackers because it also offers mid cap exposure, as well as the normal large caps? I really should know the answer, but I’m now not sure whether ‘average’ MSCI ACWI or FTSE All World trackers offer mid caps. I have a rather faint memory here that some fellow passive types had commented that they were augmenting their core global tracker holding with an FTSE 250 tracker (or Smithsonian IT) for the mid caps (I like Terry Smith, but no way will I pay 0.95% p.a. for stock picking).
@Neverland #6: you may have a point there. Of course, no one who is old and wealthy feels old and wealthy. But we’ve got to try and encourage Generation Z to invest sensibly. We can’t leave them to Tick Tock hucksters flogging meme ‘coins’ or to people punting ‘trading’ courses on You Tube. Nor will they be able to FIRE if they just leave any savings on deposit, for them to be gradually whittled away by inflation. I’m not making a point about avocado toast and forgoing iced lattes here. The younger generations really do have it harder. Giving them a decent steer on the starter investment options is a big service to the future IMO.
Re fractional shares, it will seem rather extreme to disallow an entire ISA because a few of the shares in a portfolio have been acquired on a fractional basis. Are HMRC arguing that if you bought half an Amazon share this month and half next month, then you’ve got two fractional shares in your portfolio rather than one whole one? I do think it grossly unfair that HMRC have flown this kite without explaining what they think the consequences will be. And I used to work for the buggers!
Good stuff. Might just set something up for the reward.
Given your sadness at the dearth of comments, I feel I should proffer one. I’ve only started investing a portion of my ISA allowance recently in the hope of being able to retire a little earlier.
I must say that I’ve learned an awful lot from your website and am very grateful for effort you have put into it.
I have also caught the investing bug I think! I recently opened a general account with Investengine to dribble a little bit of money into when the markets dip, to appease my sense of FOMO. I aim to stay below the CGT and dividend tax thresholds for this account though so it will never contain a huge amount of money given the direction of travel with tax rules. I was planning to use Investengine for ISAs in the future, but now I’m worried about the fractional shares issue. I do hope you’ll update us when the powers that be finally decide what to do about this issue.
I think Vanguard is worth an explicit mention rather than relying on people looking at your (great) broker comparison. Yes you can’t open it with £25pm but you only need £100pm/£500 lump sum. And then it’s significantly cheaper than Fidelity at 0.15% instead of 0.35% (and fidelity has a £90 minimum annual charge if you end your regular investment, it’s also not a flexible ISA).
I’m going to be controversial and say if you have less than £500 it’s probably not worth investing – stick to a savings account until you have a bit more cash. Once you’ve opened a Vanguard account I don’t think there are then any minimum top up amounts.
Trading212 also allow fractional share investments in an ISA. I have an account with them and was not aware of the issue with HMRC! This has got me a little nervous.
From the title I was expecting some mention of robo-investors as I recall some of them advertising things like “invest from just £1”. Also I was expecting a caution to have saved an emergency fund before investing: sage advice to those just starting out with investing!
But as always a solid article and also informative about the fractional share/ISA debacle! To me feels like the platforms should be on the hook for any penalty of allowing fractional shares in ISA’s. The counterpoint to that is the hypothetical question: if a decimal(near enough fractional) UNIT is allowed in an ISA what would be stopping a platform from creating a fund investing in just one company and doing an end run around the HMRC rules???
@ TLI – Yes, MSCI ACWI should have mid cap holdings as does Vanguard’s FTSE Global All Cap fund. Morningstar offer market cap breakdowns on their fund pages. For example, Vanguard’s All Cap fund is 19% mid cap and 5% small cap according to:
https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000XXVV&tab=3
Now I come to look at it, VWRL is 16% mid cap, negligible small cap. LGGG is 13% mid cap and the MSCI ACWI-hugging SSAC is 16%. Again, only trace elements of small cap.
@ Alex – Cheers! It’s great to hear you’ve found the site so useful.
@ Rhys and AI-ind-ex – yes, this fractional share business is ridiculous. One platform did put out a statement saying they’d compensate their investors if it came to it. I can’t remember who that was off the top of my head though. It’d be worth googling your platform’s name and “fractional shares” to see their position. As I understand it, creating a fund is quite expensive and they need to scale to work, so I guess the path of least resistance right now is to hope HMRC back down.
Many thanks @TA. Interesting that the Vanguard Global All Cap Fund (Acc) OCF is 0.23% p.a. (plus the inevitable platform fee for OEICs) for a mere 5% small cap allocation; whilst the HSBC FTSE All World Class C (Acc) Fund is at 0.13% p.a. OCF (plus platform fees again), but with no small cap exposure; and the LGGG ETF is only 0.1% p.a. OCF, again with no small cap weighting (but with the possibility to avoid the platform fee ‘tax’ – looking at you here HL – levied for funds, i.e. one can use the £45 p.a. HL platform fee cap trick for ETFs). So (even ignoring the potential for some platform fee savings with ETFs) the effective cost (by comparison with the LGGG ETF OCF) of the small cap exposure offered in the Vanguard equivalent fund is a whopping 2.6% p.a. on that 5%, which is inexplicably high and hard to justify IMO (notwithstanding that you are getting exposure to 7,156 companies in Vanguard Global All Cap). Much as I love Vanguard as a concept (e.g. not for profit, evidence based etc) and greatly applaud all that it’s done for small investors; it still has to be said that it can screwed up from time to time. This sort mispricing may be one example of that.
Another great post, thanks @TA & TI.
Apologies for the delay commenting, we have been on holiday and I am catching up.
I for one love these kinds of posts, firstly it reminds me of the basics and often prompts me to revisit things I should really have addressed by now, e.g. a SIPP or not ?
I left work 2 years ago and am very fortunate to have a DB pension providing my monthly income.
I occasionally do some consulting type work which gives me some extra cash and we are hoping to sell a property in the next 12 months, so will have cash to invest.
What I don’t quite understand is – do I continue to top my vanguard & iWeb accounts or am I better off opening a SIPP?
@TA has been very patient and explained the benefits to me previously, however I struggle sometimes to get my head around stuff. ( I appreciate this is positively basic stuff and way off the level of many of the topics covered in the excellent comments, which I really enjoy and am slowly starting to understand, I do use Google a lot when reading them to clarify stuff!)
Also re a SIPP, my son (age 22) already has 4 different (very small) pensions via his employers.
He has started a spreadsheet to record all the info for each one, my query is what is the best option with these?
Can he amalgamate them into one & can he /should he consider opening a SIPP and moving them there? (not the one with his current employer though!)
More research needed
The other huge positive for a post like this one is its so easy for me to send it to people who are starting their own investing joiuney ( my kids for example).
I am sure as time passes the comments will increase as these ‘new’ investers access the post & website and get inquisitive.
Great job, thanks
No mention of robo-investors such as Wealthify? They allow investments from £1.