The Motley Fool

Have £1k to invest? Here’s how I’d start investing today

Image source: Getty Images

Now might seem like a bad time to start investing. However, the recent stock market crash has thrown up some fantastic bargains for long-term investors. These companies might face an uncertain outlook in the near term, but they could see strong growth over the long run.

As such, if you’re looking to start investing with £1,000 today, now could be a great time to snap up a basket of these undervalued businesses.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Start investing with £1,000

As the coronavirus crisis rumbles on, the global economy is facing an uncertain future. Unemployment is surging, bad debts are rising, and many companies are struggling to stay afloat.

Nevertheless, some businesses are coping better than others in the storm. Blue-chip champions, such as Unilever and Reckitt Benckiser, have seen sales of some products rise. Meanwhile, FTSE 100 dividend giant Legal and General, seems to be shrugging off the worst of it.

These companies could be excellent long-term investments if you want to start investing with single stocks.

However, picking single stocks can be a time consuming and risky process. It can also be costly. While some online stock brokers offer commission-free trading, others charge per deal placed. These costs can add up if you’re placing lots of small transactions.

Therefore, if you’re looking to start investing with £1,000, it could be better to buy a low-cost index fund, or other fund offerings.

Buying funds

The great thing about funds is that you don’t have to do any work. When you’ve picked a fund, all you need to do is click ‘buy’, sit back, and watch your money grow. That makes them a great product to use if you want to start investing. 

Funds also buy a basket of stocks. This diversification helps minimise the risk of loss in the portfolio. Even if one or two companies go out of business, with a diversified portfolio, the impact should be minimal over the long run.

One of the best investment funds on the market at the moment is Fundsmith Equity. Managed by legendary fund manager Terry Smith, the equity fund seeks to own the best businesses in the world. Its historical performance suggests it’s quite good at meeting that goal.

If you don’t want to pick a fund manager, a low-cost FTSE 250 or FTSE 100 tracker fund could also be a good product to start investing. 

These funds only seek to track their underlying index. So there’s no risk the fund manager will make a mistake or take on too much risk like Neil Woodford did. What’s more, as these funds only track the underlying index, they tend to be quite cheap.

Today, you can buy a tracker fund with management fees of less than 0.2% per annum, compared to nearly 1% for active funds. This can have a significant impact on your investment returns over the long term.

If you want to start investing today, the best solution may be a combination of passive and active funds. That would help reduce costs and allow you to benefit from the advantages of having an active investment manager at the same time.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Rupert Hargreaves owns shares in Unilever. The Motley Fool UK owns shares of and has recommended Unilever. 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.