Interest rates may be on the rise, but they’re still not offering much of a reward to savers. With that in mind, you might be considering investing your spare money instead of putting it into a savings account.

Deciding where to invest takes some careful consideration and a fair amount of research — especially if it’s the first time you’ve ever invested. The whole point of investing is to give yourself the best shot at making a return on your money, so you don’t want to end up losing it because of a silly mistake that could have been avoided. By taking the time to ensure you fully understand where you’re putting your money and how much risk is involved, you’ll be standing in good stead to successfully grow your initial sum.

If you’ve managed to save £1,000, you have a decent amount of money to begin your investment journey. Not only will you be able to build an investment portfolio containing several assets, but you could benefit from reasonable growth before fees start eating into any potential gains.

But from investing in exchange-traded funds (ETFs) on the stock market to taking a punt on cryptocurrency, there are so many different investment options available, that it can be hard to know where to start. In this article, we’ll explain some of the different ways in which you can invest your money, go through the most popular investment products available and advise on what you need to think about before you even make the decision to start investing.

What’s the best way to invest £1,000?

There’s no “best” way to invest £1,000, as this all depends on your own personal circumstances, but some of the ways you might choose to invest your money include buying individual stocks and shares, putting your money into a fund or trust or lending to companies or individuals in return for regular interest payments.

Some other investment opportunities include buying cryptocurrency, starting a side business, investing in yourself and purchasing goods like Rolex watches, works of art and antiques in the hope that they’ll increase in value in the future.

Continue reading to find out more about how to invest £1,000.

Things to think about before you decide to invest

You may think that just because you’ve saved £1,000, you’re ready to start investing. But how much money you have isn’t the only consideration you should take. You also need to think carefully about your finances as a whole and ensure you’re in the right mindset to part with your money.

To help you decide whether or not you should invest, here are some questions you might want to ask yourself:

What’s your financial situation?

It’s important to remember that when you invest, you stand to lose money as well as make it. If you can’t afford to lose your £1,000, don’t invest it.

With some investments, your money is tied up for a certain amount of time, meaning you will be unable to access it on a whim. So before you make the decision to invest, it’s wise to ensure you have a savings pot to fall back on in case things go wrong. It’s recommended that you set aside three to six months’ wages into an “Emergency fund” in case your situation changes.

You should also make sure you’ve paid off any short-term debt, such as credit cards, personal loans, payday loans and “Buy now, pay later” purchases. This is because the interest owed on these types of debt is often much higher than any returns you might make from investing.

What’s your appetite for risk?

From stocks and shares to savings accounts to pensions, there are many different ways to invest your money, and each comes with its own level of risk. Generally, the more risk you’re prepared to take, the higher the rewards. But that also means you could face losing more — or all — of your money.

This is why it’s important to carefully consider whether you’re prepared to take a risk with your money and if so, how far you’re willing to go. Only then will you be able to decide on an investment product or asset that’s right for you.

It’s worth noting here, that it’s not only the riskiest investments that make good returns and you can always spread your money across a variety of assets to mitigate your risk. This is known as diversifying your investment portfolio.

How long do you plan to invest for?

Another important thing to know about investing in the stock market is that investments don’t usually grow in a steady line. So, you need to be prepared to leave your money invested for a minimum of five years to give you the best chance of riding out any volatility.

If you don’t plan on touching your money for a long time, riskier investments could be the way to go, as they have the potential for higher rewards. That doesn’t mean you have to pick higher-risk investments, though, as it all depends on what you feel comfortable with. Unfortunately, with investing, you can always lose everything, no matter how long your money is invested for. 

What are your investment goals?

In order to make the right decisions about what to invest in, how much risk you want to take and how long you want to invest for, ask yourself what you want to achieve and when you want to achieve it by. Setting yourself an end goal, with both long and short-term objectives can also help you feel more comfortable about your decisions and enable you to work out whether they’re realistic or not so you can make adjustments to your investing strategy accordingly.

Some common goals for investing include:

  • Beating inflation
  • Buying a house
  • Paying for a big expense, such as a holiday, a new car or a wedding
  • Saving for retirement
  • Wanting to become financially independent

How do beginners invest?

So, you’ve decided that investing is right for you, but you’re unsure as to what your options are. There are many ways to invest your money and even more investment products to choose from.

Even amateur investors would be wise to diversify their portfolios by investing in a variety of ways — and as mentioned earlier, a sum of £1,000 will give you plenty of opportunity to do this. Remember, though, that if you are ever in any doubt, you should always seek financial advice from a professional.

Each of the investment types and products below are available at various risk levels, so however you want to invest, you can choose the option that suits you best.

Types of investments

Some of the main types of investments include:

Individual stocks and shares

When you buy stock market shares, you are taking a stake in a company. Depending on how well both the company and the economy are performing, the value of your stake (which is known as the “share price”) goes up and down.

There are different types of stocks, including:

  • Growth stocks — When the time comes to sell your shares, you will have either made a profit or a loss depending on how well your investment has performed.
  • Dividend stocks — As well as having the potential to make a profit when you sell your shares, dividend stocks work by making regular payments (dividends) to shareholders. However, dividend payments aren’t guaranteed, as they depend on how well the company is performing.
Investment funds

If stock market investments appeal to you but you don’t want to invest in individual stocks, you might be more comfortable investing in a fund or investment trust instead. 

A fund is a collection of hundreds – or even thousands — of stocks, bonds or commodities which is managed by experts and traded on a stock exchange like the London Stock Exchange (LSE). 

The benefit of investing your £1,000 in a fund like an ETF is that it dilutes your risk by giving you exposure to a wide range of investments at a low cost. Just bear in mind that you won’t be benefiting from total diversification, as most funds are focused on a specific industry or country, leaving you overexposed to a particular sector or place.

Peer-to-peer lending

If you’re prepared to take on more risk for bigger returns, this could be a good option for you.

Peer-to-peer lending (P2P) is where you lend money to companies or individuals in return for regular interest payments.

Be warned, though, that if the individual can’t pay or the company goes bankrupt, you will lose your money.

Investment products

Some of the most popular investment products include:

Stocks and shares ISAs

Investing your money in a stocks and shares ISA means that not only will you be giving it the chance to grow, but you’ll be making the most of your tax-free allowance as well.

Every adult in the UK gets a tax-free savings allowance, meaning you can save up to a certain amount without paying tax on any money your ISA makes. For the tax year 2022/23, the ISA allowance is £20,000.

The benefit of saving in a stocks and shares ISA is that you won’t have to pay dividend income tax or Capital Gains Tax (CGT) on any profit you make.


You might already have a workplace pension, in which case your money will usually be invested for you. However, you can also set up your own self-invested personal pension (SIPP) and choose how the money should be invested.

Providers often give you the option of many different types of investments and you can either manage your pension yourself or leave it to the experts.

Paying into a pension is one of the best options for investing your money long-term, but keep in mind that you won’t be able to access it until you are at least 55 years old.

Is cryptocurrency a good investment?

Considering the monumental returns that some people make, investing in cryptocurrency can seem like a tempting prospect. But remember that the greater the returns, the more the risk.

If you’ve never invested before — or you have a low tolerance for risk — it’s not advisable to invest in cryptocurrency due to its extreme volatility — especially considering the crash of the crypto market in recent months.

While stocks allow you to own pieces of companies, most cryptocurrencies have no underlying assets and their worth is based purely on speculation. That said, more companies are now accepting cryptocurrencies like Bitcoin as payment, so if you are a forward-thinker and you’re looking for an alternative to traditional trading and investing, crypto could be a viable option. Especially if you lower your risk level by diversifying your portfolio with other types of investments. 

Alternative ways to invest

Invest in goods

Things like classic cars, Rolex watches, works of art and antiques can increase in value significantly over time, meaning you could make money by selling them for more than what you bought them for. 

However, to make a good return on your investment, you must be an expert in your niche. To ensure you don’t end up wasting your money on something that actually decreases in value, it’s vital that you have some idea of what’s likely to make money and what the trends are in that particular market.

Invest in a side business

Whether it’s your own side business or you’re confident that a friend, colleague or family member has a fruitful business idea, investing your £1,000 in a start-up can provide lucrative returns if it takes off.

Invest in yourself

If you’re nervous about putting your money in someone else’s hands, you might be better off investing in yourself. Furthering your education and personal development can provide long-lasting returns that you’ll be able to benefit from for years to come.

Final word

Please note that the information given in this article should not be taken as investment advice and that if you are unsure of what to do with your money, you should speak to an independent financial advisor.

Also, remember that when you invest, you are taking a risk and that the value of your investment can go down as well as up, meaning you could get back less than you invested.


How to invest £1,000 depends on your personal circumstances. Some of the most common ways to invest your money include buying individual shares in the stock market, putting your money into a fund or trust or lending to companies or individuals in return for regular interest payments. Alternatively, you might choose to buy cryptocurrency, put your money into a side business, invest in yourself or purchase goods like Rolex watches, works of art and antiques in the hope that they’ll increase in value in the future. It would be wise not to put all your eggs in one basket, though, and £1,000 will give you the opportunity to invest in a combination of ways to diversify your portfolio and lower your risk level.

If you’re thinking about investing, how much money you have isn’t the only consideration to take. In order to make an informed and sensible decision, you should also ask yourself what your personal financial situation is like, how much appetite you have for risk, how long you plan to invest and what your investment goals are.

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