How to invest £100 a month, for beginners

Investing £100 a month is more than enough to get started, but if you are new to the game, knowing where to begin can feel like the hardest part.

For many would-be investors, worries about the best way to invest or concerns about making the wrong decision can lead to paralysis.

But don’t let being a beginner stop you from getting involved. 

The good news is that investing does not need to be complicated. Once you have chosen an account, picked an investment, and made your first contribution, the key is simply to keep going.

So, what’s the best way to invest £100 per month in the UK?

Step 1: Choose the right account

If you don’t have one already, you need to open an account to begin investing. 

This might be a:

• Stocks and Shares ISA: If you want to invest tax efficiently.
• Self Invested Personal Pension (SIPP): If you want to save for retirement and won’t need to access your savings until you’re at least 55 (rising to 57 from 2028)
• General Investing Account (GIA): If you want to invest flexibly outside a tax-free wrapper.

Any of them might be appropriate for you and your circumstances.

All of these account variants are included with Freetrade’s free Basic plan. 

If you are investing relatively small amounts, like £100, one of the most important considerations is to keep account fees to a minimum so they don’t eat away at your portfolio.

Spending just £5 per month on trade commissions would effectively reduce the base amount you invest in your portfolio by £60 per year. That’s a significant chunk to miss out on when commission-free trading options, like Freetrade, exist. Other charges may apply. 

Step 2: The best place to invest your £100

Maybe you already have a particular investment in mind, maybe you want to do some research and find something new. 

If you know what you want, head to the Freetrade app or web platform and type the name of the asset in the search bar. If it’s one of the 7,000+ investments on the Freetrade platform, it will show up immediately. Easy peasy. 

Of course, it’s a different story if you still need to decide on your investment…

What to invest your £100 in

Stuck for what to invest in? That’s okay - Freetrade has over 7,000 different investments available, so the choice can be overwhelming! But it does not need to be complicated. 

1. Want to make your own decisions? Pick your own stocks and funds.
2. Want simplicity? Consider a diversified ETF, such as a global index fund. 
3. Want it all done for you? There’s always the option of leaving things to the experts, and just picking a ready-made portfolio.

Remember that you don’t have to just pick one investment! In fact, spreading your money across different investments that bridge different asset types, markets, and sectors can be a good thing. 

This is called diversification, and it can reduce the impact of poor performance from any single investment in your portfolio.

New discoveries

Lacking in inspiration? 

A great place to find new ideas is Freetrade’s Discover tab. Here, you can find collections of assets based around different themes or sectors that you might find interesting. They include:

• Most bought stocks this week
• Investing in Britain
• Income-generating stocks
• AI and robotics

Step 3: Buy!

When you have found what you want, it’s time to transact! Just hit the “Buy” option in the Freetrade app or web platform. Depending on the time of day, and the type of asset you are investing in, you may be presented with several ways to buy.

For example, you can buy with an instant order, a limit order, or a triggered order. Instant orders will let you buy now at the best price, while the latter options set conditions for your purchase of an asset.

Step 4: Invest £100 a month

Well done, you are now an investor! 

But Rome wasn’t built in a day, and your portfolio won’t be either.

One of the best ways to support your financial future is through disciplined regular investment.

Over the long term, this can seriously add up. If you can afford to do so, contributing little and often can help you to build a surprisingly large pot. Just look at the potential returns for investing £100 per month for 5 years, 10 years, and more! Remember, the value of your investments can go down as well as up, and you may get back less than you invest.

Monthly £100 contributions with 7% average annual return

Forecasts are not a reliable indicator of future performance.

It’s discipline that builds a portfolio like this. In many ways, the best way to invest £100 is to invest £100 per month. And the best way to invest £100 per month is to stay consistent!

You don’t have to do it manually every time you invest. 

With Freetrade, you can easily set up a recurring order that will regularly invest in your chosen asset(s). Couple this with a regular direct debit into your Freetrade account, and you can easily automate your investing. 

Find out more about regular investing with Freetrade’s guide to pound-cost averaging vs lump sum investing.