Buying UK shares is a brilliant way to build long-term wealth, and the earlier investors start the better. Many delay because they think a big lump sum is required, but in practice it isn’t.
That’s an issue, because every delay is damaging. Missing out on two or three years right at the start can seriously set an investor back.
Let’s say somebody starts investing £100 a month from age 25 and keeps going to age 65. If that pot grows at 7% a year, by age 65 it will stand at £256,331. If they delay just two years and don’t start until age 27, the total drops to £221,568. The contribution gap is only £2,400, but the pot ends up £34,763 smaller. Early contributions matter most because they have so much longer to build and grow.
Buying FTSE 100 stocks
So even for someone with only got a modest sum like £500, it makes sense to get stuck in. Since it’s a long time since I was in that position, I asked ChatGPT for a steer.
Unfortunately, it wandered through the rules on ISAs and SIPPs without really tackling the question. It also said an investor needs to “find a platform that accepts £500”, which is obvious. ChatGPT then claimed some platforms “only accept monthly contributions”, which sounds plain wrong to me. Why would they reject a lump sum? It would be madness.
There was more in that vein before I gave up and did my own research. It took seconds to discover that AJ Bell lets users open an account with a minimum £250 lump sum, while Hargreaves Lansdown accepts just £100. Both let investors make regular monthly investments from £25. Some app-based services go even lower, with Moneybox allowing somebody to start with just £1.
I’ve learned there’s little point in using ChatGPT to pick shares. Much of the information is dated or generic. It isn’t a stock-picking service and, to be fair, doesn’t pretend to be.
I’d consider Lloyds Banking Group
One share that a beginner might consider is Lloyds Banking Group (LSE: LLOY). It’s a sensible first building block. The FTSE 100 lender, owner of mortgage lender Halifax, has spent years repairing itself after the chaos of the financial crisis. The shares have shone lately, rising roughly 90% over the last year, although nobody should expect that kind of performance every year.
Lloyds is also a sturdy dividend payer. The trailing yield is currently 3.35% for new investors, but analysts expect that to rise steadily as the bank lifts shareholder payouts at a decent clip. Forecasts suggest a yield of 3.81% in full-year 2025 and 4.41% in 2026, a healthy rate for reinvestors looking to compound over time.
The bank is tightly focused on the UK. If the economy stalls or house prices struggle, the shares could take a hit. But I think it’s well worth considering with a long-term view. I hold it myself.
In time, I think investors should aim for a portfolio of at least a dozen stocks and invest whatever they can spare each month. £500 is a good beginning, but it will need topping up steadily to build meaningful long-term wealth.
