How To Invest £100, According To Top Financial Influencer

Think you need thousands to start investing? Think again. As the rising cost of living puts a squeeze on people’s finances, one of the UK’s biggest financial influencers has revealed what he would do with his first £100

Damien Jordan, founder of Financial Interest and Damien Talks Money, shares his tips to make investing feel achievable without breaking the bank.

Damien comments: “All investing has risk and I understand that getting started can be confusing and daunting, but I firmly believe that the biggest risk is not investing at all. Brits have been labelled “the worst investors in Europe” Why? Because we stick our Great British Pounds into savings accounts. In fact, about £1.8 trillion sits in cash savings in the UK, which is £27,000 for every man, woman, and child, and £400 billion of that is in accounts that produce a 1% return or less. The value of that money is rotting away, being eaten by the effects of inflation. I believe that the British public has been misled by investing hype and crazes, and as a result, they’re missing out on one of the greatest tools for building and protecting their wealth.”

Choose what to invest in

The global stock market has produced a historical average annual return after inflation of 6.7% and it has a track record of outrunning inflation long-term. Of course, you have the option to invest in specific individual companies like Tesla, Amazon, or whoever you want, but my preference and core investment approach is exactly what Warren Buffet recommends for beginners — a low cost, passively managed index fund. Essentially, an index fund is one investment that represents the whole market. This means you don’t need to rely on picking the stocks of a handful of companies for success.

Only invest money you don’t need

Even investing in index funds isn’t guaranteed to be a smooth ride; your investments will go up and down day to day. In reality, the stock market is very volatile, and so my one rule is to only invest money I won’t need for at least 10 years.

Choose which platform you will invest with

All you’ll need to get started is a phone or computer and your payment details, plus a way to verify your identity. It may seem like you need a lot of money before you can consider investing but, in reality, some providers will allow new investors to start with as little as £1 these days, and can even offer incentives such as free shares or welcome bonuses once you sign up.

Choose your account type

Once you’ve chosen your investing platform, you’ll need to open an investing account. Choosing a Stocks & Shares ISA is the best way for most people to shield their investments from dividend and capital gains tax. Unless you have used your £20,000 annual ISA allowance, there is no reason to use a general investing account over an ISA, as this opens you up to paying tax. Avoid CFD accounts, as over 70% of people lose money using them.

Choose which funds to invest in

Once you’ve picked a provider and opened an ISA account with that provider, you can choose which funds to invest in. If you want to see some of the most popular fund options on different investing platforms, Financial Interest offers a free Index Fund Cheat Sheet.

How stock market investments make money

By purchasing shares, you can gain a small amount of ownership in some of the world’s biggest companies. Your investment can grow in one of two ways. Firstly, the company’s share price may appreciate over time, meaning you can sell it for more than you paid. The other form of returns comes via dividends. This is where a share of a company’s profits are redistributed back to investors. For example, if you own 10 shares in a company — and a dividend of £1.50 per share is announced — you’d pocket £15.

Damien finished by saying: “To be clear, this guidance only talks about how to buy a fund for educational purposes. I’m not recommending any specific fund investment as I’m not a financial advisor, and even if I were, I don’t know your personal situation, I can’t tell you what to invest in. This is just a simple overview of the investment process. Your capital is always at risk when investing, and past performance isn’t a guarantee of future results.”