9 Smart Ways To Invest £1,000 - The Humble Penny (2024)

9 Smart Ways to Invest £1,000

Congratulations, you’ve got £1,000 to invest!

So what should you do next?

How should you invest your money without worry?

And how can you make it work for you so that you can achieve some of your future goals?

If you're fairly new to investing and don't know where to start, the ideas below will surely get you started.

If you're still to find your first £1,000 to invest, check out 8 Things to do before you start investing for some tips.

I am a big fan of learning and investing by one's own conviction, and this is why The Humble Penny exists to help you with the journey.

To get started with investing check out The Humble Guide to Passive Investing – Episode 1 of 10.

I'd also recommend, joining the FreePracticalMoney course by clicking HERE.

BEST WAYS TO INVEST £1000

Below are 9 smart ways I would invest £1,000.

You can mix and match these ideas to suit your needs.

Check them out to get started and don't forget to watch the YouTube Video below:

1. Invest In A Pension

Investing in a pension is by far one of the best things you can do.

A Self Invested Pension Plan (SIPP) is a personal pension (usually online) where you’re fully in the driving seat.

Those reading outside the UK can also find local equivalents.

These are similar to opening a bank account and you need your National Insurance (or Social Security) number.

The key differences here are as follows:

• This is a tax-free account. As such, you get a tax rebate each time you pay into it from your net income (which already suffered tax).
• This rebate means you pay less tax overall. i.e. for every £1, you pay into the SIPP, the government gives you a tax rebate from the tax you already paid on your income in the year.
• By investing £1,000, you get £250 credited into your SIPP within 1 month or so. Totalling £1,250 in your account.
• If you’re a higher rate taxpayer, you also can claim back up to another £250 via your tax return or adjust your tax code.
• Making your net cost of investing £750. I.e. £1,000 deposited becomes £1,250 and ends up costing only £750. So, you're £500 up before you've bought any assets in your SIPP.
• You can’t touch this money until retirement, so it has alot of time to work and earn you returns, which you pay some tax on later.

The really good thing about a SIPP is that you can hold different investments in it. These could include:

Shares, Cash, Exchange Traded Funds (ETFs), Investment Trusts, Commercial Property, Bonds, Unit trusts and Open Ended Investment Companies.

One of the critically important benefits of a SIPP is that if one passes away, the SIPP passes onto their beneficiaries tax-free i.e. it is outside your estate for inheritance tax.

There are many providers of SIPP accounts. Examples include Hargreaves Lansdown, Best Invest, and Interactive Investor.

NOTE:We now create YouTube videos. Subscribe here

2. Invest In A Business Or Side hustle

This is one of my favouriteways of investing £1,000.

Today, the cost of starting a business is minimal because a lot of tools you need can be accessed by paying a subscription.

Online businesses present a massive opportunity that anyone from anywhere and of any age can access and make a success.

In fact, creating a business or side hustle is a very significant lever for your Financial Independence.

The most exciting part for me is the opportunity to create an evergreen business with potential lifetime value. This could earn you passive income and can be operated from anywhere.

Check out 85 Ways to Make Extra Money for a lot of practical online and offline ideas.

There are even ways of starting a business for free and with zero risk.

If you're interested in going on an exciting adventure, why not start your own side-hustle? Join the course below:

3. Invest In A Coach

Investing in a coach might seem expensive but it is one of the best investments you can ever make for two reasons:

1. You shortcut your learning and implement quickly from someone who has been there and learned the hard way.
2. You build a super valuable relationship that has lifetime value and opens doors.

I am privileged to have coachedand learned from many people from around the world.

But, I couldn't have gotten anywhere near where I am today without receiving coaching myself.

I took up the services of an Executive Coach in 2015 and this opened my eyes like never before and gave me alot of confidence to pursue things I'd always wanted to.

In fact, it was such a good opportunity that I continue to meet my coach and we attend business events together.

Money spent on a coach should not be viewed as an expense.

Rather, view it as swapping one asset (cash) for another asset (investment in a coach), which will serve you for a very long time.

Feel free to check out what the options are re Coaching. It could just be the transformation you need now.

4. Invest In Yourself

There is no better investment than an investment in yourself.

I have previously written about why I think reading books is the most powerful life hack ever! People's best ideas are in their books.

You get to understand their stories, struggles, and experiences of how they dealt with challenges, and pick up ideas that you can apply immediately.

What was the last book you read? and what did you take away from it?

£1,000 will go very far in drastically improving who you are and what you have to offer.

I can certainly tell you that about 5% of my disposable income is spent on investing in my personal development.

Related:

• 20+ Best Resources – Recommended by The Humble Penny. These cover Money Saving, Side Hustles, Productivity, Books, etc
• 30+ Life Transforming Books I Recommend. These cover Investing, Financial Independence, Business, Productivity, Leadership, etc.

5. Invest In Education

Investing in education gives you the opportunity to access both knowledge and understanding at the same time.

You can educate yourself in all kinds of ways such as Books, languages, instruments, specialist courses, niche online courses, certifications, etc.

Examples of areas I have been educating myself on for my blog journey include digital marketing, understanding the mind and copywriting.

Check out the Academy section of this site for more ways to educate yourself.

I'll be writing some more targeted courses to help you on your financial journey indue course.

6. Invest In An Index fund or ETF

Investing in an index fund or ETF gives you the opportunity to possibly:

• Preserve your capital
• Stay diversified
• Achieve growth
• Keep costs low

When most people think of investing, they imagine buying a share or a fund and watching it grow.

A big part of that possible growth is down to the one-off and ongoing admin and management fees you incur whether your investment is rising or falling.

Part of the goal of investing in an index fund or ETF is to ensure you keep these ongoing costs low and transparent or make an element of them fixed.

Vanguard is a pioneer of index fund and ETF investing. You can also access these via Hargreaves Lansdown.

Related:

• Passive Investing And Why You Should Care
• Index Fund Investing And The Simple Path To Wealth
• Investing Risks You Should Be Aware Of

Check out Our YouTube Channel to learn more about ETFs vs Index Funds:

7. Invest in Peer to Peer lending (P2P)

P2P growing in popularity, with established names in this space that can help you generate a return of up to 7% on your £1,000.

These include RateSetter, The House Crowd, Zopa and Funding Circle.

With P2P, you're lending money to businesses via the above-named platforms and for that, you receive periodic interest as returns.

You can also invest in P2P via an Individual Savings Account (ISA) and therefore your returns are tax-free.

Note that like all investing this also involves a level of risk to your capital.

Related:

• RateSetter Review: A New Way To Invest. Plus £100 Bonus Offer
• The House Crowd Review: Should You Invest?
• How To Invest Through Peer-to-peer Lending

8. Invest To Pay Down Debt

If you have high-interest debt, then paying down that debt with your £1,000 is a very sensible thing to do.

Interest on debt compounds in the same way that reinvested dividends compound on share investments.

So paying off the high-interest debt is another way of guaranteeing a return on your £1,000.

In fact, paying down debt on your mortgage, for example, is a big domino for your Financial Independence.

Related:

• 7 Essential Habits For A Debt Free Journey
• Why Setting Goals Is Important For Debt Freedom
• 10 Tried And Tested Tips To Help You Become Debt Free

Other resources:

• National Debt Advice

See how overpaying on a mortgage by £1000 per month can wife off 14 years from the mortgage term:

9. Invest In Dividend-Paying Stocks

Stock picking is a challenge for many reasons, one of which is that you potentially plow your entire £1,000 into one company.

Therefore, if you're going to explore investing in shares, it's usually best to buy blue-chip companies that pay dividends.

These don't usually have high volatility I.e. don't move a lot with the market, unless there is significant company newsor if it's a tech stock.

Spreading your investment (via pound cost averaging) over different days is also another way of investing that offers some diversification.

Buying dividend payers is a great strategy as you work towards your financial independence.

Related:

• How Much Money Is Enough?

To conclude, investing £1,000 is a significant step in your path to managing your money and building your confidence.

It is also a strong indicator that you'll enjoy the process and journey of Financial Independence.

Like these ideas? How would you invest £1000? Please comment below

Do please share this post if you found it useful, and remember,in all things be thankful and Seek Joy.