Investing your first (or even your second) £1000 is extremely exciting. After you’ve done the hard work of saving up some funds, it’s worth taking a look at some different ways to invest that money.

This way you can make sure you grow that money and over the years turn that thousand pounds into a much larger sum.

One of the hardest things is knowing what to do with your money and where you can put it to grow. With rock bottom interest rates, gone are the days of chucking the money in your local bank and receiving a tidy bit of interest.

In the current climate, interest rates on savings are nowhere near the levels of inflation. Which means any cash sat still in a bank account is actually losing value.

What is the best way to invest £1000?

Spoiler alert - there is no single best way to invest money. Everyone will have opinions on the matter but really the question should be:

“What is the best way for me to invest?”

Emphasis on the ‘me’. Your goals and appetite for risk may be completely different to your neighbours. So there’s no one size fits all answer.

However, for someone just starting out, there are some really fun ways to invest your first £1000.

I’m going to breakdown a couple of different methods to hopefully give you some inspiration.

Investing your first £1000 is a really exciting time and a big step on your path to financial freedom. So let’s take a look at how you can make that money work.

What are some different ways to invest money?

Here are some basic ways you can invest £1000 and get started on your journey to financial freedom:

1. Index Funds

I know I bang on about index funds a lot but it’s because they’re great.

If you pick this way to invest, I’d recommend either going for:

  1. A global equity fund that covers a lot of markets
  2. A broad US fund like the S&P 500 or the total US stock market (called 'US equity index fund' on Vanguard’s UK site)

Here are some other top index funds to help inspire you.

2. Investment Trusts

Investment trusts are basically managed funds. So they usually come with higher fees than index funds.

However, what’s great about these investments is that you can pick different ones depending on your specific goals or interests.

There are some excellent funds that focus on paying you an income through dividends. Or there are trusts set up specifically to invest in companies tackling climate change.

By choosing this way to invest your £1000, you can either put it all into a single investment trust or perhaps spread the funds across a few of them.

This way you can get lots of diversification and remain invested in a number of different areas with experts managing what companies to pick.


If you’re dead set on picking individual stocks and shares, I’d recommend going for the big boys.

FAANG stands for:

  • Facebook (FB)
  • Apple (AAPL)
  • Amazon (AMZN)
  • Netflix (NFLX)
  • Google (GOOGL - Alphabet)

These are big blue chip technology stocks that you are probably familiar with. If you’re just starting out, investing in these companies can be a good shout.

They won’t remain top of the pile forever, but they would be a better pick than selecting a bunch of obscure companies to invest in.

You can put £200 into each business to reduce your risk. Another bonus company I would probably chuck in is Microsoft (MSFT).

Investing this way means you won’t have much diversification in your portfolio. But these are big money making companies with a track record of strong performances.

4. Across the Pond

This was something I suggested in an article I wrote for The Motley Fool. The basic premise is that you invest:

  • £500 in the S&P 500
  • £500 in the FTSE 250

Doing this will mean you own some of the biggest and best companies in the US and the UK.

Although it means just two countries, you’ll get a big variety of businesses in lots of industries. What’s also cool about this is that the American and UK stock markets tend to be made up of different styles of businesses.

So you’ll get a decent balance of things like high-growth tech from the US and more reliable value and cyclical options from the UK.

Once I’ve picked the way I want to invest, what next?

When you’ve decided what you want to do with your £1000, your next step is to actually start investing.

Keeping your costs down by going for a cheap investment platform is always useful. You just need to make sure the platform you pick has the investments that you want.

Personally, I think for index funds you can’t beat Vanguard. Then for individual shares or investment trusts, Freetrade is a great option.

Both these platforms allow you to use a stocks and shares ISA, which is the best type of investment account for most UK investors.

Good luck!