How much do you need to start investing?

Here is the answer most people are not expecting: not very much at all.

There is a widely held belief that investing is something you do once you have got a spare ten thousand pounds sitting around doing nothing. That it requires a lump sum, a financial adviser in an expensive office, and probably a firm handshake. This belief is wrong, outdated, and — frankly — has put a lot of people off starting when they absolutely should have.

The reality in 2024 is that you can start investing with as little as one pound. Which, yes, sounds almost comically small. But stick with me, because the amount you start with matters far less than most people think. What matters enormously is when you start.

The lump sum myth

For decades, investing required meaningful upfront capital. Brokers had minimum investment thresholds, funds had entry requirements, and the whole thing was structured in a way that quietly excluded anyone who wasn’t already reasonably well off.

That world has largely gone. Modern investment platforms — and we will cover these in detail in a later post — allow you to start with tiny amounts and add to your pot regularly over time. Some have no minimum at all. Others ask for as little as one or five pounds to open an account.

You do not need a lump sum. You do not need to wait until you feel ready. You need a plan, a small amount you can invest regularly, and the discipline to leave it alone.

The power of investing regularly

Let’s say you invest £100 a month. Not a dramatic sum — roughly the cost of a couple of meals out and a few rounds of drinks. Over time, assuming average market returns of around 7% per year, here is roughly what that looks like:

• After 10 years: approximately £17,000
• After 20 years: approximately £52,000
• After 30 years: approximately £121,000

You will have put in £36,000 of your own money over those 30 years. The rest — £85,000 — is growth. That is compound interest doing its quiet, relentless work in the background.

Now imagine you waited ten years before starting. Same £100 a month, same returns. After 20 years of investing you would have around £52,000 — less than half. You didn’t lose money by waiting. You just lost time, and time is the one thing you cannot buy back.

So what’s a sensible amount to start with?

Honestly? Whatever you can genuinely afford to invest each month without it causing you stress. There is no magic number.

If you can only manage £25 a month right now, start with £25. If you can stretch to £200, great. If your circumstances change and you can invest more later, you increase it. The important thing is to begin, get comfortable with the process, and build the habit.

Think of it less like a financial transaction and more like going to the gym. The first few sessions feel awkward and you wonder if you’re doing it right. But you show up anyway, and eventually it just becomes part of what you do.

One thing to watch: fees

If you are starting with a very small amount — say, under £50 a month — you need to pay attention to platform fees. Some platforms charge a flat monthly fee of £3 or £5, which sounds trivial but represents a significant percentage of a tiny investment. That eats into your returns before the market has even had a chance to help you.

For smaller starting amounts, look for platforms that charge a percentage fee rather than a flat one, or that have no monthly account fee at all. We will do a proper breakdown of UK platforms in a later post, but it is worth keeping in mind from the start.

What if I do have a lump sum?

Lucky you. The evidence generally suggests that investing a lump sum all at once beats drip-feeding it in over time — roughly two thirds of the time, historically. This is because markets tend to go up, so time in the market beats timing the market.

That said, if the idea of investing £10,000 on a single day makes your stomach turn — because what if the market drops next week? — then splitting it into monthly chunks over six to twelve months is a perfectly reasonable approach. You might end up with slightly less in the long run, but you will sleep better and be less likely to panic and pull it all out if things wobble.

A slightly lower return you actually stick to is worth far more than a theoretically optimal strategy you abandon at the first sign of trouble.

The bottom line

You do not need a lot of money to start investing. You need some money, a bit of consistency, and enough patience to let time do the heavy lifting.

The best time to start was ten years ago. The second best time is now. Even if now means £25 a month and a vague sense that you are doing the right thing without fully understanding why yet.

You will understand more as you go. That is what this blog is for.This blog is for informational purposes only and does not constitute financial advice. Always do your own research or speak to a qualified financial adviser before making investment decisions. Figures used are illustrative and based on assumed average returns — actual returns will