How to invest your first £100 in the UK
Connor is a journalist with over 10 years' experience who specialises in finance and business news. Based in London, he also works for Sky News and the BBC.
Last updated 25th February 2026
9 min read
My late grandad had a saying: "Look after the pennies, and the pounds will look after themselves."
And when I was growing up, he took a different approach to pocket money.
Instead of handing out cash for sweets, he saved £2 a week in a cash ISA from the day I was born until I was 18.
On the day of my 18th birthday, he presented me with an envelope showing what the balance was – the £1,872 he'd invested, a surprisingly high amount in itself considering it was just £2 per week, was now worth over £3,000 thanks to interest.
This gave me a huge head start as I moved away from home and started my adult life.
It also taught me a valuable lesson: putting a little amount away can make a huge difference for your financial future.
You don't need to be a mega millionaire to benefit from compound interest – and you don't need to sacrifice the little pleasures in life, a takeaway coffee here or a pint there, to save for a rainy day.
Yet there seems to be something putting Brits off investing.
Just 23% of people in the UK currently invest in the stock market, compared to 61% of people in the US.
It's difficult to know why there's such a disparity.
Some may feel it's just too technical to get their head around, or perhaps too risky. And given the ongoing cost-of-living crisis, it's fair to assume many of us have other pressing financial matters on our minds.
Today, we want to simplify the investing process for you – and help you realise that the majority of people can put small amounts away for later life.
We'll run through how you could invest your first £100, with small ongoing contributions after that.
The beauty of this guide is that it'll work just as well whether you have £20 or £50 to spare, or have the means to set aside a little more.
Financial Interest provides guidance, not advice. If you’re unsure about anything, speak with a qualified adviser. When investing, your capital is always at risk. Past performance does not guarantee future results.
Investing vs speculating
The first thing you need to understand is the two key differences between investing and speculating: timelines and risk.
Investors tend to adopt a long-term view with the investments they hold. And while there's always risk when it comes to the stock market, the objective here is to secure gradual gains over time.
Meanwhile, speculators are constantly on the lookout for huge gains – and quickly. But with the prospect of eye-wateringly high returns comes a lot of risk, and there's always a danger that an asset could see its value fall substantially.
A good example of a speculative asset are cryptocurrencies like Bitcoin. While this digital asset did see its price surge by 146% in 2023, this was on the back of a bruising 62% fall in 2022.
The Financial Conduct Authority estimates that almost seven million Brits have dabbled in crypto – with many losing a substantial amount of money.
Other recent examples include products like Pokémon cards and NFTs, with the majority of purchasers simply hoping to make a quick buck – and the silent majority failed to do so.
Even stock trading can be speculative, just look at the Gamestop saga, or any average Joe on the street picking up the next big oil stock "that will 10x in price if they find oil!"
Narrator: They never find oil.
In contrast, many long-term investors wouldn't feel the real-world impact of a portfolio dropping by 50% in value because their investment funds are entirely separate from their living funds – and they know their funds will be in the market for another ten, twenty, or even thirty-plus years.
Yes, every investment has risk.
But long-term investing in stocks and shares has traditionally been on the safer side of the risk spectrum.
Speculating is a much bigger gamble – and often one with no evidence that it will actually pay off for the majority of people.
The power of compounding
As we saw with my grandad, modest contributions have the potential to grow over time – and that's thanks to the power of compounding.
The average return of the S&P 500 has been around 10% per year since the 1950s.
Let's imagine that you invest £100 and it grows by 10% in the first year. That'll leave you with a balance of £110, and gains of £10.
If that performance was to be repeated in year two, this time you'd receive £11 – an extra pound because you've made returns on your returns. Year three would bring £12.10, year four £13.31, and year five £14.46.
As you can see, that initial £100 can do some heavy lifting. Left untouched with returns of 10% a year, it would be worth £270 after 10 years – and £732 after 20 years.
This brings us neatly to the importance of leaving your investment alone (if you can help it).
Regular withdrawals will deny your savings a chance to grow, and trying to time the market to avoid losses is largely a futile endeavour. Historically, the best and worst trading days have tended to cluster in brief periods, and your chances of predicting exactly when to get out – and then get back in – are vanishingly small.
So, let's look at how that first £100 grow with average returns of 10% a year once regular monthly contributions are thrown into the mix? The figures will blow your socks off:
| Monthly contribution | 10 years | 15 years | 20 years | 25 years |
|---|---|---|---|---|
| £5 | £1,303 | £2,535 | £4,561 | £7,895 |
| £10 | £2,336 | £4,624 | £8,389 | £14,585 |
| £20 | £4,401 | £8,803 | £16,046 | £27,964 |
| £50 | £10,598 | £21,341 | £39,017 | £68,100 |
| £100 | £20,925 | £42,237 | £77,302 | £134,995 |
As you can see, these are some pretty eye-popping numbers – and it just shows what's possible if you're able to set a little bit aside each month.
Just ask Warren Buffet, who accumulated 90% of his reported $160 billion wealth after his 65th birthday.
By adopting a long-term horizon, crashes in the stock market become less of a concern.
Taking some time to crunch the numbers, pore over your budget, and allocate some money to investing every month can potentially prove hugely rewarding in the years to come.
It's important to be realistic about what is affordable for you, regard it as untouchable, and make sure it's one of the first things that flies out of your bank account after payday. As the famous saying goes: pay yourself first.
Because investments are intended to be left to grow for years on end, you might also want to separately save some cash every month that can be dipped into whenever there's an emergency. This is known as an emergency fund.
So… what are the types of investments on offer, and how do you get started?
Read our optimal order for investing in the UK, put together using insights from financial advisers and solid academic research
Shares in individual companies, as well as index funds like ETFs, are two easy ways of gaining exposure to the stock market.
By purchasing shares (also known as stocks), 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. For example, 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 company's net 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.
This can be a substantial source of income.
Research shows that £92.1 billion in dividends was paid out by UK companies in 2024. Many trading platforms allow you to automatically reinvest these payouts in order to buy additional shares, further unlocking the power of compounding that we talked about earlier.
But being all in on one stock is very speculative. Building a portfolio of stocks based on your own intuition and limited research is still speculative, too. Index funds take a slightly different approach.
Here, multiple stocks are bundled together in a single asset.
For example a FTSE 100 index fund would give you exposure to every company on the FTSE 100 list, and mimic the entire market's day-to-day movements.
You could opt for an index fund focused on any specific region, such as America or the entire world, or sector, such as healthcare or finance.
Consistently buying a low cost index fund such as the S&P 500 is exactly what Warren Buffet recommends for casual investors.
The biggest benefit of index funds lies in how they offer diversification – meaning you don't have all your eggs in one basket, and annual charges are usually pretty low. And comparing these two types of assets side by side, the biggest argument in favour of index funds lies in how they probably won't be as volatile as an individual stock in the long term.
As you'll find out, the choice of shares and index funds available on the market can be pretty overwhelming.
How to get started
Knowing where to invest is just as important as knowing how. The very first thing you'll need to do is open a stocks & shares ISA. This allows you to invest up to £20,000 a year – with any and all returns completely tax free.
Because finding the best broker can be a minefield, we've listed our top picks here and we've also built a handy tool that lets you compare popular brokers.
To help you figure out what to invest in, check out our completely free index funds for beginners course hosted by Damien from Damien Talks Money. No prior knowledge required, and you can work through it at your own pace.
If you fancy a little more reading, try our beginner's guide to index funds or our full explainer on ETFs.
And if you're ready to jump in, you can find an in-depth article on how to buy shares and index funds here – complete with a step-by-step guide to creating an account.
You can also find a variety of new customer offers, welcome bonuses and even free shares via our offers page.
Establishing a standing order so it coincides with your salary can be a great idea.
A question you might have right now is this: should I invest a little every month, or commit to a lump sum in one go?
One benefit of small and frequent deposits comes in the form of pound-cost averaging. This helps build a regular habit, removes emotion from the process, and reduces the risk of jumping into the market with a big investment at an inopportune moment.
And there you have it: a rough guide on how to invest your first £100.
This is an exciting journey to begin – but it's one that requires patience and discipline.
Financial Interest provides guidance, not advice. If you’re unsure about anything, speak with a qualified adviser. When investing, your capital is always at risk. Past performance does not guarantee future results.
