3 steps to start investing with £1,000

Starting the investing journey can be intimidating, especially when dipping toes into the stock markets. Here are my three simple steps to getting started.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

Starting the investing journey can be intimidating. And this is especially true of stock market investments, since it is hard to know which stocks to pick. Here are three steps to starting investing with £1,000 that I’d take if I could start over. 

Step 1: define investing goals

The first step is to define my goals. For instance, I may want to build up my retirement nest egg. To this end, I would to buy dividend stocks that could over time develop a nice flow of passive income. Or I might have a big life expense coming up, for which I need to grow my capital base. To achieve this, I could buy stocks that have a high likelihood of delivering growth in investment over time. 

Typically, goals will relate to both income and growth stocks. I try to divide my investing portfolio between both these types of stocks for that reason. Though, sometimes the choice is not required. For example, these days, oil biggies and mining stocks offer not just potential for capital gains but also high dividends. Of course, this is an ideal scenario but I would not depend on it. There is no way of knowing how long up-cycles in such commodity stocks last. In my view, the best way to assess whether the stock is better for income or growth, is by considering long-term trends in share price and dividend yields. 

Step 2: focus on FTSE 100 stocks

Next, when I started investing, initially my focus was the best quality stocks. These are typically large companies that have been around for a long time. They are also likely to be multi-nationals, with a predictable revenue stream, if not incomes as well.

While these are typically present in the FTSE 100 index, which makes life a bit easier, it still requires researching each of these 100 companies to make the correct choices. Reading through articles on investing websites like this one, is a great way to get a perspective on which stocks to buy

After having invested the initial £1,000 I would try and add to my investments as often as I can to ensure that my savings keep growing.  

Step 3: review investments periodically

And last, I would take a close look at my stock holdings periodically. It can happen that some stocks that appeared to hold great promise, may have undergone a dramatic turn of fortune. For instance, regulations on tobacco products or the expected decline of fossil fuel usage could make these stocks unattractive over time. 

On the other hand, we are witnessing the rise of electric vehicles, and clean energy solutions more generally. Stocks in these industries could see the fates smiling on them, which might not have been the case earlier. As an investor, I watch out for these long-term trends and invest accordingly to get the best returns on my portfolio. 

A point to note

As a parting thought, I think it is essential to say that when it comes to stock market investing, nothing is risk free. We are buying stake in companies, which may or may not do well. In my experience, most of the time, well-chosen investments tend to do well. Some may turn out to be poor decisions, though. Overall, however, if I an able to achieve my goals, there is little to complain about!

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Number three written on white chat bubble on blue background
Investing Articles

Just released: the 3 best growth-focused stocks to consider buying in July [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Portrait of a boy with the map of the world painted on his face.
Investing Articles

Warren Buffett’s Berkshire Hathaway dumped this growth stock. Here’s why I won’t

Eyebrows were raised when Warren Buffett's company invested in this Latin American fintech disruptor a few years ago. But now…

Read more »

Fireworks display in the shape of willow at Newcastle, Co. Down , Northern Ireland at Halloween.
Investing Articles

£15k to spend? 3 UK shares, investment trusts and ETFs to consider for a £1,185 second income

By harnessing a range of different dividend stocks, I'm confident this mini portfolio might pay a large long-term second income.

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Is Tesla stock about to crash?

Tesla stock was on the slide today, shedding around $80bn in market value. What's going on with the electric vehicle…

Read more »

Thoughtful man using his phone while riding on a train and looking through the window
Investing Articles

Should British investors consider buying Apple stock while it’s down 14% in 2025?

Apple stock has underperformed in 2025, falling more than 10%. Is this the buying opportunity UK investors have been waiting…

Read more »

Two business people sitting at cafe working on new project using laptop. Young businesswoman taking notes and businessman working on laptop computer.
US Stock

2 AI growth shares that I think are still undervalued

Jon Smith flags up two AI growth shares that aren't as overhyped as some peers, making them appealing for him…

Read more »

Thoughtful man using his phone while riding on a train and looking through the window
Investing Articles

Where is the next Nvidia stock right now?

Nvidia stock has delivered jaw-dropping gains. Here are 10 growth shares that have the potential to also produce big returns…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Could these FTSE 100 stocks explode in July?

Looking for FTSE stocks that could catch fire this month? Here are the share price prospects of two popular London…

Read more »