How to Invest 500 Pounds UK – Best Options

Invest 500 Pounds UK

You have 500 Pounds to invest and you are wondering what the best investment is? In this case, you should carefully consider the various options available. Usually, investing as small as £500 doesn’t yield much, but there are a few key factors to consider when investing 500 Pounds.

This year has also been impacted by the pandemic, but investment in the financial environment could be better if the hopes of a vaccine shine through. We think of assets that are closely related to economic recovery.

In this guide, we present the 10 best investments for investing 500 Pounds in 2021. We will show you the advantages and disadvantages of these so-called investments. We will close with practical advice before investing.

Where to invest £500- the most profitable investments

With an envelope of £500, a wide range of investments is offered in the UK. This guide shows the top of them, but obviously, there are many more. The most important thing is to find an investment that offers the best return on your investment. Here are the top 10 best investments to invest £500 without delay.

  1. Invest in the stock market
  2. Invest in gold and precious metal
  3. Invest in bonds
  4. Invest in forex
  5. Invest in the private equity
  6. Invest in index funds and ETFs
  7. Invest in ISA
  8. Invest in Bitcoin
  9. Invest in tech sectors
  10. Invest in treasury bonds

Invest in the stock market

Invest 500 Pounds in stock

The stock market is often the first choice for many investors. And while the risks seem substantial, such as the market slumped in the face of the Covid-19 pandemic in 2021, all studies show investments over the long term, i.e. over 10 or 20 years. The stock market is almost always profitable.

Buying stocks and investing in the stock market is not the riskiest way to invest £500. However, it is important to remember that in financial markets, the higher the risk, the greater the potential return. If you choose to Buy shares and invest in stock market, you must accept the possibility of losses. In addition, since active investment in the stock market requires a basic understanding of finance and technical analysis, you must be willing to receive some training to invest in stocks.

Invest in gold and precious metal

Invest 500 Pounds in Gold

Gold and precious metals are safe havens. In this time of economic and financial crisis, with traditional currencies devaluing, gold is an ideal alternative to protect against inflation. In 2021, prices have risen in the market. With the advent of derivatives today, there are several different ways to invest in gold. You can invest in cash, CFDs, or ETFs. You can enjoy leverage when trading CFDs with gold.

The gold mining is limited and it is depleting. We can no longer artificially manufacture like the traditional coin. It solves the problem of the country in a time of crisis. This means that investments in gold are somewhat protected from inflation. Read our beginners guide on Gold Trading

The jewelry and technology industry accounts for 70% of the world’s gold production. These are two areas that are in good health and have the potential to grow further over the next few years. Gold is a universal commodity. This means liquidity is maximized. People are always ready to buy gold. However, this does not mean that we guarantee a money-back guarantee at the point of sale.

Invest in bonds

Invest 500 Pounds in bonds

Bonds allow a company or public entity to raise money by issuing debt. The issuer (company) issues bonds and returns money and interest (so-called coupons) to the payee (natural person). This form of financing is a fixed-income vehicle and is widely used by businesses and public institutions. A bond is thus a loan that we give to a company or business.

Bonds are classified as fixed-income investments. It is a fairly safe investment because you know in advance the conditions for recovering the principal and interest. Bonds can be purchased directly without intermediaries, which increases the return on investment. Bonds are free-term financial instruments.

The profitability of buying bonds is between 1% and 5%. Yields vary by company and bond type. The better the financial results of the company you are betting on, the more profitable the coupon will be. You can invest your money directly. You can also do this through specialized purchasing companies such as mutual funds.

Invest in forex

Invest 500 Pounds in Forex

Currency or Forex trading is an international marketplace, also known by the name of the currency market, and features an over-the-counter market (OTC) where people buy and sell major world currencies such as the British Pounds, euro, US dollar, and Canadian dollar, Australian dollars, Swiss Francs, Yen, etc. It is considered the most liquid and largest financial market in the world due to its numerous operators and a variety of currencies.

Liquidity is one of the greatest strengths of the foreign exchange market. For example, if we want to withdraw money, we can do so at any time due to the constant flow of funds in the market. Some brokers allow investors to start with a minimum deposit of $50. Forex is a 24/7 trading market, and as the market is active 24 hours a day, the market adapts perfectly to the respective agendas of investors who knows How to trade Forex and can trade anytime, anywhere during the day.

Invest in Private Equity

Invest 500 Pounds in Private Equity

Investing in a company is better known as private equity or nominal capital investment. Private equity is an investment model in which individuals decide to invest their money in a company that is not listed on the stock market. Before the digital revolution, this form of investment was suitable for brokers with large-scale funding capabilities. With the democratization of financial services, individual investors can invest their money in stocks through crowdfunding.

Financial companies look very lucrative as their profitability can increase from 3% to 15%. You are also in control of your investments. That said, we are always looking for companies that offer better returns. If you want to invest your money in a promising company, it’s a good idea to invest £500 in private equity stocks.

Invest in index funds & ETFs

Invest 500 Pounds in index funds

A less risky way to invest 500 Pounds is to invest in ETFs. These financial instruments track changes in the most important stock indices, such as S&P 500 index and the FTSE100 index. Because stock indices are “baskets” that group multiple stocks together, you can spread the risk of investing in many stocks. Of course, lower risk also means lower potential returns.

One of the best reasons to invest in S&P 500 index fund is to diversify your portfolio immediately. Investing £500 in these funds is essentially buying stock in 500 companies operating in a variety of industries. This means that if some companies go through a recession, some of the others can rebound to make up for their losses.

Like the S&P 500, the FTSE 100 is known for consistently generating positive annual returns. Over the past 25 years, the index has returned an average annual return of 6.47%. If you like passive investing and want exposure to both UK and US markets, you can build a portfolio of these two index funds using £500.

Invest in ISA

invest 500 Pounds in ISA

ISA is not new. It is a program launched by the government to save money without paying taxes on your income on the first £20,000 per year you invest (currently at the 2020-2021 rate).

There are several forms of ISA (simply short for Personal Savings Account). Under UK law, you must pay tax on all income you receive through employment, self-employment, or investment. However, you can invest up to £20,000 per year in an ISA and pay no taxes on your income.

An initial investment of £500 in an investment company that pays an average of 5.5% per annum will make your investment worth £527.50 after one year. Earnings are £27.50. After 10 years, your investment would have increased to £854.07. Gross earnings £354.07. That’s a lot more than £5.02 in a savings account.

This doesn’t sound like much for your paper investment, but it’s considerably higher than the 50p you earn through the bank. It gets even more interesting when we start looking at the second year and beyond when compounding begins.

Invest in Bitcoin

Invest 500 Pounds in Bitcoin

In recent years, cryptocurrencies have become very popular as a form of investment. Cryptocurrency is a virtual currency based on blockchain technology, a computer protocol for encrypted transactions. Currently, the market cap of cryptocurrencies is $1 trillion, with Bitcoin accounting for more than 60% of the cryptocurrency market.

It is important to note that cryptocurrencies are highly volatile financial investments and therefore subject to large-scale hacker attacks. So it is important to ensure the security of the tokens before investing or trading cryptocurrency.

Bitcoin served as more than just an intermediary for exchanges and now generally performs the functions of a traditional currency. It was also the 6th currency in the world in terms of market capitalization. Bitcoin is a profitable but volatile financial asset. It is expected to reach $100,000 in the not-too-distant future.

Invest in the Tech Sector

Invest 500 Pounds in tech sector

As technological innovation accelerates in the world and digital processes have become the need of the hour for every business. With the growing demand in the market, the tech companies are growing rapidly and the market share of the tech companies has increased remarkably. The technology sector is the largest industry in the United States, accounting for more than 25% of the total market. The tech sector of the US is dominating the world market. The tech sector is growing rapidly amid the Covid-19 pandemic.

Many people make positive returns by investing in the tech sector either directly or through Exchange Traded Funds (ETFs). Investments in this sector are likely to pay off, as this sector includes big players like Apple, Netflix, Facebook, Tesla, Google, and more.

Invest in Treasury Bonds

Invest 500 Pounds in treasury bonds

As the economy collapsed and the stock market weakened, assets like government bonds or treasury bonds have become more attractive. Treasury bonds are worth considering if you want to invest outside of stocks and want to invest £500 as safely as possible.

Treasury bonds are considered safe because they are backed by the state. For example, U.S. Treasury bonds are backed by the U.S. government, so these bonds could default only if the government collapses, which is rare. Due to the low-risk nature of these bonds, their yields are relatively low.

One way to get exposure to Treasury bonds is with the iShares ETF offered by eToro. They require a minimum investment of $1,000. The ETF then tracks the performance of 20-year U.S. bonds, providing passive long-term income.

Best brokers to invest £500 in the UK

We have explained the best possible investment opportunities to you for investing 500 Pounds in the UK. For the hassle-free investment, you are required to invest through an online broker. Now it is time to discuss online brokers. Few top brokers are listed below-


Invest in eToro

eToro is particularly characterized by a “copy exchange” function. Not only can you replicate the investment strategies of top-performing traders, but you can also analyze your strategies and share them with more than 20 million users.

eToro is an FCA-regulated broker and has partnered with FSCS to secure deposits up to £50,000. eToro recently surpassed 20 million users worldwide. This is a remarkable feat given that it has been in operation for just over 13 years. They have a wide range of potential assets including stocks, bonds, ETFs, cryptocurrencies, currencies, and more.

It is relatively inexpensive in terms of cost. There are no fees to buy stocks, no fees to trade stocks, and no escrow fees. The platform only charges a withdrawal fee ($5) and an inactivity fee of $10 if the platform has not been used for more than a year. Therefore, it can be classified as low cost compared to the competition.


Invest in Libertex

Libertex is an online broker that is founded in 1997. The broker has been providing excellent and loyal service for over 20 years. These corridors are in nearly 30 countries. It is also used by over 2 million users worldwide. Mobile applications and the MetaTrader 4 platform are two tools that can be particularly effective. The Fees range from 0.1% to 0.2% on this platform.

Libertex is a CFD stock and broker app. This means there is no real security when you exchange them. Instead, there is a contract based on the price of the underlying asset. This contract pays the difference between opening and closing positions. CFDs are a great way to guess the price of stocks, ETFs, cryptocurrencies, bonds, or other financial instruments.


Invest in IG

IG is the largest broker in the world when it comes to CFDs. We have approximately 200,000 customers in 15 countries worldwide. The platform offers its clients more than 17,000 financial stocks, most of which are equity derivatives (CFDs). In terms of fees, the standard fee is 0.5%.

When it comes to CFD offerings, IG has a variety of stocks in which you can invest £500. This includes stocks, currencies, metals, ETFs, and more. You are sure to find a CFD you are interested in at IG.

Opening an IG account is easy and can be completed online. They require a minimum deposit of $100. Users can do this in several ways, including bank transfers or credit/debit cards. There are no deposit and withdrawal fees and once you have funds in your account, you can invest in CFDs offered by IG.

How to invest £500 via the broker

Once you choose the broker you can start investing the funds. The process of investing funds with an online broker is almost the same for every broker. Here we are selecting eToro for investing £500. Suppose the investor wants to invest the whole amount in stocks. Here is the process of investing £500 in the stocks-

Invest in eToro

Step 1- Create the account

The first step is to create an account with the selected broker. To create the account with eToro you have to visit the official site where you have to fill the subscription form to create the account. eToro requires your name, email address, and phone number. The broker will verify your information for authentication.

Step 2- Deposit the funds

Once your account is created, you can deposit funds by going to “My Account” and then click “Deposit”. You will then need to enter the amount, currency, and payment method you want to use to deposit your funds. You can pay with the following payment methods on eToro- Credit/Debit Card, PayPal, Neteller, Skrill, and wire transfer. The minimum initial payment is $50 to $10,000. If you are depositing by bank transfer, the minimum amount is $500.

Step 3- Invest the £500 in stocks

Once you make a deposit, you can buy stocks and invest your money in the stock market. You can find the “Market” link in the left tab of your account. Use these links to find different markets and stocks. You can also search directly from the search bar at the top center of the page. You can then choose how many shares to buy at the market price or a specific price level.

It is also very important to define the stop-loss level (above the threshold at which you want to sell the stock to minimize the loss) and what you make a profit (the upper limit you can use the stock to monetize the profit).

Tips for the investors to invest 500 Pounds

It is necessary to reconsider and further evaluate the actions of individual investors with a total value of more than 500 Pounds. This is a significant amount for a middle-class person and it often represents savings over several years. There are three important parameters to consider when comparing the different investment options of 500 Pounds.


Risk is a fundamental parameter of any investment. Are you looking for an investment that guarantees capital, or are you willing to take the risk? This answer allows you to discard certain options and give preference to others.


The return, which is usually the inverse function of risk, is the potential return on investment. It is known to everyone that higher risk attracts higher returns. So, if you prefer high-yield investments, you have to take the risk of losses.


Not all investments are equally liquid. For example, withdrawing funds from a savings account A is very easy, but withdrawing from a life insurance contract is more complex and has tax implications. When investing in stocks, you don’t necessarily have to sell stocks at the most convenient time to gain liquidity when you need money urgently.

Investment period

It is also important to know whether to invest £500 in the short or long term. Investing in short-term, low-yielding investments doesn’t make sense, in which case stocks are preferred, although riskier. Conversely, the power of compounding allows you to get interesting returns on your investments with lower returns and lower risk in the long run.

Do your research

This requires performing advanced research to find the best investment for your investor profile. As noted investor Warren Buffett advised, prioritization should be given to stocks or investments that have been “unfairly” or “unduly” penalized and have benefited from interesting upside potential.

Choosing the right time to invest

You also need to decide whether now is the right time to buy stocks or not. We tend to be attracted to fast-growing stocks, but we must remember that investing in the stock market is buying low and selling high.


You should also pay attention to dividends. Stocks can be a good investment because of their upside potential as well as their dividend yield. Some stocks do not fluctuate much, but some stocks pay dividends comfortably.


Investors must be willing to take risks to get a decent return. An alternative investment is a real estate, but the investment is limited to £500, which limits the possibilities.The stock market invests in stocks, which newcomers may consider a risky investment. However, principles such as portfolio diversification or risk management and selection of existing stocks can limit the risk of investing £500 in stocks without eliminating the risk.

If you have an investment of £500, we recommend stocks, an investment topic with a wide range of options, from individual stock purchases to index funds or ETFs that specialize in a sector or geographic area. The online broker eToro seems to be the ideal broker with a wide variety of stocks and funds, very competitive rates, an intuitive platform, and the ability to invest in cash or CFDs.


What is the best investment to invest 500 Pounds in?

Determining the best investment for £500 depends on several factors, including your tolerance for risk and your expectations of return. You also need to know how many years you can keep these funds or if you have easy access to them when you need them.

What is the lowest risk investment to invest 500 Pounds?

Investments like ISA and treasury bonds are less risky. There is no risk of capital loss in this type of investment.

Who is the best broker to invest 500 Pounds in stocks?

eToro brokers offer a variety of international stocks that can be traded in CFDs or purchased with cash to receive dividends. The rates are also very competitive and the intuitive platform will appeal to beginners.

Which system has the highest profitability potential where you can invest 500 Pounds?

These are the stocks that offer the best return potential of any £500 investment option. But it is also one of the riskiest investments. Choosing the right stock investment requires some knowledge and a lot of research.