How to Invest 5000 Pounds in the UK – Easy Guide

Looking forward to investing 5000 pounds in the UK? Then you are at the very right place, as in this guide we will cover all the important things from where to invest in how to invest in and what to consider before investing 5000 pounds in the UK. There are a variety of trading assets that you can invest 5000 pounds in. Make sure to stick until the very end of the article to have a better understanding and grip over investing 5000 pounds in the UK.

How to Invest 5000 Pounds in the UK - Easy Guide

Best Investments Under 5000 pounds

There are thousands of ways you could consider investing in 5000 pounds, below are listed a few of those highly profitable assets that you may consider adding to your investment portfolio. 

FTSE 100 ETF 

The FTS100 ETF is a must to consider when looking to invest 5000 pounds in the UK. As the name suggests, FTSE 100 ETF consists of the 100 largest companies listed on the London Stock Exchange on the basis of the valuation. Some of the biggest companies that fall under FTSE 100 are AstraZeneca, Royal Dutch Shell, British American Tobacco, Vodafone, Rio Tinto and many more. The key benefit of investing 5000 pounds in FTSE 100 ETF is that instead of investing 5000 pounds in one or two shares you will be investing in a diversified basket of stocks. This index allows you to recover dividends and one key thing to note here is that Index rebalances and re-weighed every three months.

FTSE100 chart

As we already know the index is weighted, which means, suppose you are investing in Unilever, which has a weight of 4 per cent. That means the 4% of your 5000 pounds that is 200 pounds investment will be held in Unilever shares.  Before you jump straight into investing 5000 pounds in FTS100, keep in mind that it is still recovering from the corona pandemic effects. In 2020, it was dropped from 7000 points to 5000 points. However, that’s nothing to stress over as the UK economy at present is at a very exciting level. That means, Investing now in the FTSE 100 may be the best time to do so. 

So, if you have made up your mind to invest in FTS100 the very first thing you are required to do is to go through an ETF ( Exchange Traded Funds). This ETF provider will buy all the 100 shares that are listed under FTS 100 which you can invest in at eToro. 

Gold- Safest Investment

Invest 5000 Pounds in Gold

Another amazing way to invest 5000 pounds in the UK is to invest in commodities, such as Gold. Gold as an investment asset is majorly used to mitigate the risk involved in the market during market stress. Gold serves as a hedge against inflation and currency risk. Gold is the safest investment and is highly favoured in the UK for its hedging property. Historically gold as an investment and in terms of returns has performed well and it continues to do so. To illustrate this point further, In 1992, gold was priced at £200 per ounce and now in 2021 at the time of writing this article, its value is worth more than $1,738. That means, gold from 1992 to 2001 has grown by 769%. Since 2016, it has grown by 80%, which means investing in gold can be very profitable.

Gold share price chart

Traditionally, to invest in gold you would require to purchase it in its tangible form. However, today you are not required to do it in a traditional way as today you can invest in gold today by investing in ETFs that track the value of gold. 

SPDR ETF is a type of exchange-traded fund that allows investors to make an investment in gold and in other metals indirectly. The ETF provider buys and keeps hold of gold on your behalf. You can invest in gold through our most favourite platform, eToro. If you are planning on investing in gold for long term investment you should opt for an ETF but if you are planning on a short term investment then you are required to opt for CFDs.

Amazon Shares- Best shares to invest 5000 pounds

Invest 5000 Pounds in Amazon

Another asset that you should consider when investing 5000 pounds in the UK is Amazon. 

It has the potential to double your investment over a period. This eCommerce giant, Amazon has performed tremendously in the past years- enabling its investors to make a profit of over 16,000 per cent. Amazon was launched in 1994 by Jeff Bezos and since then it has been following an upward trajectory. Well, it doesn’t mean that it never experienced a fallout. In Fact, it took 14 years for Amazon to regain the heights it achieved during the dot com crash.  It first started out as an online bookstore and then started spreading its wings into other areas also such as an online store, DVDs, CDs, consumer goods, prime, and many more. At present Amazon, shares are worth more than $3388.00 which means that if you had invested £1,000 in Amazon back in 1997, your investments would now be worth over $1.35 million. Amazon now has a market capitalization of $171.8 trillion and according to Bloomberg Jeff Bezos, founder and executive of Amazon are personally worth over $201 billion. Well, you will be surprised to know that Amazon has not and never will pay a single penny in dividends.

Amazon share price chart

The biggest reason is that Amazon is much more than an online retail division, it offers additional products and services that are outstanding in the industry such as Amazon Web Services, Amazon Prime and Amazon Prime Video. 

In 2020 during its first ten months, the stocks have managed to increase by over 80 Percent, which means it is among those companies who have benefited from the pandemic though it also experienced a downturn also but to say the least it managed to survive better than other assets. 

Even the future of Amazon looks brighter than ever as  Amazon is working on other innovative projects such as grocery space. For this project, it is planning on investing in Deliveroo and expanding its swift half an hour delivery times. Another sector in which you will see Amazon growing itself is artificial intelligence and drone deliveries. Amazon’s web service generated a revenue of $45.37 billion in the year 2021, which is higher than both Google and Microsoft in terms of computing services. 

Therefore, If you have made up your mind about investing in Amazon, then we recommend you to buy shares through the one of the best free trading platform, eToro.

Tesla Shares- Invest 5000 pounds

Invest 5000 Pounds in Tesla

Just like Amazon, Tesla is also a great consideration for investing 5000 pounds in the UK. The name “Tesla” in itself is dominating as today it is the largest automaker in the world. It is an electric car manufacturer that was first launched in 2003. There are other automakers also, but none stands a chance against the innovative Tesla. What makes it this powerful is its innovative idea of using battery technology instead of fuels. 

Tesla Shares are one of the most popular and comfortable stock traded on the stock market that many will keep forever. This is crazy to know that during the pandemic Tesla was forced to shut its main US plant due to low rock bottom consumer demand, but even then Tesla shares were increased almost 400 % in the first month of trading. In early 2021, Tesla shares hit their all-time high of $900 per share, an increase of over 23,000% and that too only in a decade. That means, if you had invested 5000 pounds a decade ago in 2010, your money would now be worth over £1 million. 

Tesla Share Price chart

Well, one more thing to consider here before investing in Tesla is the company has never paid a single penny as a dividend to its shareholders and it seems likely to be the case for many years to come. Which does make sense as the company has just started its journey of electric car makers. In terms of what the future holds for Tesla, then remember the company isn’t involved only with vehicles, it has many innovative projects including SpaceX. Simply put, you won’t regret investing 5000 pounds in Tesla.

If you are willing to invest in Tesla Shares for your long term investment then the best place for you is the eToro. On eToro you don’t have to worry about paying a single penny as a commission or fee and you can start investing in it from as low as $50. Furthermore, this broker is FCA regulated.

Cryptocurrencies – High Risk Investment

Another powerful asset, in which you can invest your 5000 pounds in the UK is cryptocurrencies. 

However, it is well suitable for those who have a big appetite for risks. If you are someone who wants to add an asset that is less risky to your portfolio, then don’t proceed further.

Both retail investors and institutional investors are getting allured by cryptocurrency investments. Cryptocurrencies are digital currencies that as an investment are useful for both short and long term Investments. 

With hundreds of cryptocurrencies, the most dominating cryptocurrency that has been able to top the market cap charts, again and again, is Bitcoin. It is proven to be the best performing crypto and an investment asset globally. It was started at less than $0.01 per coin and today at the time of writing this article it has surpassed over $54,180.

That means, if you had invested $1 back in 2009, you would now be a multimillionaire and many have become so and if you had invested 5000 pounds into Bitcoin at a price of 1 penny then your money would now be worth more than £250 million. However, one thing to keep in mind is that apart from being a really productive asset, this digital currency is also very volatile and there are many variables standing in the way of this crypto. Bitcoin is an asset that frees you from all the problems that are involved with the monetary system. That is why it is advised to do some portfolio management and keep your investment portfolio to a minimum of no more than 5 per cent.

Bitcoin Chart

Ethereum is the second-largest cryptocurrency and is commonly known as the best alternative to Bitcoin. If you are looking to invest in a cryptocurrency other than Bitcoin, then Ethereum is the way to go. It is known to be the foundation of smart contracts and many believe that it is much more stable in comparison with Bitcoin. 

Apart from Bitcoin and Ethereum, there are also other cryptocurrencies that have outperformed their selves and continue to do so such as Ripple, Litecoin, EOS that you can add to your investment portfolio.

If you have made up your mind on investing 5000 pounds in cryptocurrencies, then the best way to approach these highly speculative assets is through our most favourite trading platform, eToro. It is commission-free and allows you to start investing in Bitcoin from as low as $25, also you don’t have to worry about storage. 

Real Estate Investments Trusts (REITs)

Real Estate- invest 5000 pounds

Another asset that you can add to your trading portfolio is Real Estate Trusts. It is a great choice when thinking of investing in 5000 pounds. The very first thing that you should know to break the stereotype is that real estate investment is not only about investing in homes only, there are a lot of other options such as investment funds, SCPI (Shares of companies that manage real estate). Among all the investment platforms, real estate is the one to offer low volatility and is classified as an alternative investment class. However, accessing real estate is a bit challenging in the UK. To invest in real estate in the UK either you must have a 6 figure in your pocket or you have the guts to commit to a 35+ mortgage. And, even if you qualify in both of these options, it doesn’t allow you to make a diversified investment portfolio. However, today you can access Real Estate at much lower costs. When talking about fundamentals, investing in Real Estate allows you to make profits in terms of rental income and capital appreciation. However, how much you make depends on the type of properties you have invested in, as well as on the wider real estate maker itself. Also when you invest in a Real estate investment trust through Exchange-traded Funds you have the power in your hands to cash out your money any time you want.

Best Trading Platforms to invest 5000 pounds in the UK

At present, there are thousands of trading platforms available in the market that you can choose for investing in 5000 pounds in the UK. However, not all Platforms are trustworthy. There are a variety of trading metrics that you should consider before selecting a trading platform such as regulations, trading assets, commission and fees, deposits and withdrawals and many more. But, checking all these metrics on all these platforms can be very hectic and time-consuming. Therefore, for your convenience, we have listed down the best trading platforms that you can trust blindly.

eToro-  Best Commission Free Trading Platform

eToro- Best trading platform to invest 5000 pounds

The very first Platform that we have on our list is eToro. It is the world’s finest trading platform that offers a variety of financial assets for investment including, Cryptocurrencies, Commodities, Indices trading, and Shares. It offers 800+ Shares globally. This platform allows you to trade stocks that are listed on the London, New York and Tokyo exchanges.

 On this platform you are allowed to apply the leverage of up to 1:5 and even you can buy assets traditionally. 

The platform is further regulated by the FCA, ASIC and CySEC. Even the platform is accessible to US traders as it is also registered with FINRA. Except you will be required to pay a 0.5% fee on all your deposits and $5 on every withdrawal. It is the cheapest and one of the best brokering service provider in the UK.

For beginners, eToro provides the copy trading feature. This feature allows you to copy ongoing trades of expert traders. You can also use the copy portfolio feature, which allows you to diversify your investment portfolio. Unlike other platforms, account creation on this platform is not time-consuming. It takes only a few minutes to create an account on eToro. Once you are done with creating an account you are then required to fund it to start your trading journey. For the convenience of its user’s, it accepts various payment methods for making a deposit such as Debit/Credit Card, Bank account, e-wallet e.t.c. The fee attached to the platform is an inactivity fee of $5, which is understandable and also the spreads are relatively low. The platform also offers a mobile application for the convenience of its customers. This trading platform also offers 24/7 available customer support which other free platforms don’t offer.

Pros 

  • Beginner-friendly 
  • Regulated by  FCA, ASIC and CySEC 
  • Copy-trading and CopyPortfolio feature 
  • Offers a variety of financial assets 
  • Accepts debit/credit, bank account, e-wallet
  • Fractional trading 
  • Offers 800+ shares
  • Offers a variety of trading features

Cons 

  • Not suitable for advanced learners

Fineco Bank– Diversify your Portfolio

Fineco Bank logo

The second best trading platform that we have on our trading list to invest 5000 pounds is Fineco bank. This amazing Platform is packed with all the amazing Platforms that make it a favourite among trades. This online broker is FCA regulated and is partnered with FSCS to safeguard the funds of its investors. It is backed by an Italian bank that has been active since 1999.

This platform gives you access to various asset classes, thousands of international stocks, dozens of exchanges and markets to diversify your investment portfolio. Though the platform doesn’t allow you to purchase shares Commission free, this platform is one of the cheapest trading platforms that allow you to pay just £2.95 per trade with a small annual platform fee of 0.25%.

The only drawback to Fineco Bank is that it doesn’t support cryptocurrencies or Copy Trading tools. It offers low investments and requires a small fee. This small fee applies to each global exchange you invest in. The minimum deposit amount on Fineco Bank is £100. Since it offers you to go both long or short on your selected trading assets, as well as offers you to apply the leverage of up to 1:5 if you are a UK retailer, the platform is a must to go with.

Pros 

  • Regulated by the FCA
  • Allow access to thousands of UK and international shares 
  • Allow depositing with UK bank account 
  • Beginner-friendly 
  • Offers great research and educational department 
  • Charges a small amount, £2.95 per trade when buying and selling shares. 

Cons 

  • Charges 0.25% annual fee
  • Doesn’t accept debit/ Credit cards for Withdrawals and deposits.

IG- Best platform for diversification

IG - best trading platform

Another amazing platform that we recommend you to invest 5000 pounds in the Uk is, IG. This amazing platform is a favourite among traders because it allows you to apply Leverage. That means you don’t have to worry about investing more even if you don’t have huge sums in your pocket. It is regulated by FCA, which means you don’t have to worry about the safety and security of your funds. The platform gives you access to over 12,000 assets and allows you to apply the leverage of up to 1:200 on forex trading for pairs like EUR/USD, EUR/GBP, EUR/GBP, EUR/JPY, and USD/JPY. That means with an account balance of just $300, you could potentially trade with $60,000. What attracts the traders most to this platform is that it gives access to over 80 currency pairs. 

This trading platform is highly suitable for those who are looking forward to trading forex but don’t have enough money. 

The account creation on this trading platform is also super easy. However, you do need to pay an entry-level fee of £8. But the good thing is that if you trade regularly then this entry-level fee will be reduced to £3. Once created an account you will be required to make a minimum deposit of $250 on this platform to initiate trading. This minimum deposit isn’t the fee of this platform but the working capital that is needed by the investors to start investing journey.

Pros 

  • Well reputed UK Broker 
  • Offers more than 12,000 traditional assets
  • Offers leverage and short selling
  • Offers spread betting and CFD products
  • Offers educational tools 
  • Offers more than 80 pairs 
  • MT4 is supported 

Cons

  • $15 commission on US stocks 
  • $250 minimum deposit amount

Things you should ask yourself before investing in 5000 pounds in the UK.

Above we have mentioned a variety of trading assets including high-risk assets, such as cryptocurrencies in which you can invest your 5000 pounds in the Uk. One thing to note here is that investing also involves risks to some extent. Therefore, before you make up your mind about investing 5000 pounds in the UK, you must ask a few questions to yourself that are listed below.

1. Am I prepared to lose my investments? 

See the thing is every investment carries a risk to some extent. Of course, you may enjoy higher returns on your investments but there are chances that you may lose everything you have invested. So before you make any such commitment, first ask yourself, are you ready to lose everything you have invested or not? If you are having second thoughts then do not proceed further. 

2. Is the investment I am making ‘liquid’? 

This is very very important because if you are not fully aware of what you are actually doing if you cannot understand it then you can never make much out of it. So, before you invest in you should know whether your investments are liquid or not, that is whether it is available when you need it? Is it easy to sell at the time you need it? Would people be willing to buy this investment from you? and many more. So it is better to first search for the answers to all such questions before you make any move. The one best example of liquid investment is Real Estate Investment Trusts.

3. What if things go wrong?

What is the guarantee that your investments are safe? What if you wake up knowing you have money on your investments? Well, I know having such thoughts scares you inside-out. That’s why to never face such a situation you must make sure that you are using a regulated broker. In the UK the FCA authorization ensures that the platform is safe and trustworthy. If the platform is not regulated then you cannot raise a dispute if it dupes away your money. So, confirming the regulations becomes a necessity when choosing a broker. You can check whether a platform is regulated or not on the Financial Services Register. Also, to play on the safer side you are advised to invest 5000 pounds in a variety of different assets instead of investing all in a single asset. This way you will be able to make a diversified investment portfolio by mitigating the risk of losses.

4. Do I need to get financial advice?

Well, that totally depends on your understanding of the assets and investments. If you believe you have a keen understanding of investments and risks then you are good on your own. But, if you believe you still are lacking somewhere then yes you should seek financial advice. But before you choose any advisor make sure to confirm your advisor is regulated by the FCA.

To add more to your knowledge you can also take help from the internet, you can read investment blogs, watch investments related YouTube videos and listen to investment podcasts. The choice is all yours.

How to invest in 5000 pounds through a trading platform

There are thousands of trading platforms that allow you to invest in 5000 pounds, but the very best platform in our opinion is eToro. This platform is the favourite among UK investors for a variety of reasons. One key thing to note here is the procedure of creating an account is almost the same on every trading platform. Below is a step by step guide so that you get a crystal clear understanding of the procedure of investing in 5000 pounds through a trading platform. 

Step 1: Create an Account  

eToro Step 1 - create an account

The very first step to investing 5000 pounds through a trading platform, eToro, is to create a trading account on its website. To do so you are required to fill in a registration form by entering in your basic details such as your name, phone number, e-mail address, and setting a strong password. After entering all of your details make sure to accept terms and conditions. 

eToro will ask you to verify your identity by uploading some of your documents, don’t worry as your documents are truly safe on this platform. However, you don’t need to undergo verification until you deposit more than $2,250 or you request a withdrawal. 

Step2: Fund your Trading Account

Now that you have successfully registered on this platform you are now all set to fund your account by making a minimum deposit of £160. This funding amount isn’t the fee of the robot but the working capital that is needed by the traders to execute trades. eToro offers several payment methods for the convenience of its traders, you can choose whatever method you feel more comfortable with. The payment methods supported by eToro are Debit/Credit Card, PayPal, Skrill, Nettler, and Bank Transfer. 

Step 3: Make your investments

Now that you have successfully registered and funded your trading account, you are now all set to invest in your selected asset. To do so, all you are required to do is to locate the asset you want to invest in by entering its name, For example, if you are looking forward to investing in Bitcoin then simply enter ‘Bitcoin’ or ‘BTC’ into the search engine at the top of the page and once entered click on the result that appears in front of you. Then click on the ‘Trade Button’, enter your desired amount and then click finally on ‘Open Trade’ to complete your commission-free Investment. On this platform, you also have the privilege to apply Leverage and you can also set a stop loss or take profit level for your trade using the order form.

Conclusion

I hope from this guide you got all the information you were looking for Investing 5000 pounds in the UK. All the above-mentioned trading platforms are the best trading platforms that allow you to diversify your investment portfolio. Before you jump straight into investing in 5000 pounds you are first advised to ask yourself whether you are ready to take risk or not and what are your financial goals. Without knowing these things you cannot enjoy a seamless trading journey. 

We recommend you to invest through our most favourite trading platform, eToro. 

FAQs 

  1. What is the best place to invest 5000 pounds in a risk-free manner?

Well, one thing that you should note down in your mind is that Investing is all about taking risks, there is no investment asset that doesn’t involve risk. Each and every asset involves risk to some extent. Hence, finding an asset that is risk-free is nearly impossible. However, there are very few assets that contain risk to a lower level such as Real Estate. 

  1.  How much money can I make from investing 5000 pounds in the UK? 

Well, there is no specific answer to this question as no two assets are the same. It depends on the asset you have invested in and for how long you have invested in it. Unless you have invested in fixed-rate assets such as Bonds, then there is no way to know how much you will make over a period. However, you can do some background research on how the asset has performed in the past on the basis of the research you can have a vague idea, but again you cannot know any specific amount.

  1. What is the best way to invest 5000 pounds in the UK? 

If you have made up your mind about investing 5000 pounds in the UK, then the best way to utilize this opportunity is to diversify your portfolio. Rather than investing 5000 pounds in a single asset, you are advised to invest 5000 pounds in a variety of assets. This way you will lower your chances of incurring losses as if one asset fails to meet your financial goal, the other will meet up to your expectations. All the above-mentioned trading platforms offer you to diversify your investment portfolio.

  1. Which is the best trading platform to invest 5000 pounds in the UK? 

All the above-mentioned trading platforms are the best ones that offer you a variety of trading assets at a lower cost or even commission-free. However, the best of all is eToro. It is a commission-free trading platform, that allows you to invest by depositing as low as £50. This trading platform is the most favourite trading platform among UK investors. 

  1. Should I invest 5000 pounds in shares? 

Investing 5000 pounds in the UK is the best option to consider especially when you are a first-time investor. When investing in shares in the UK, you have thousands of stocks to choose from. However, there is one thing that you should be careful of when investing in shares, that always make sure to make a diversified portfolio. And, before you jump into investing in make sure to do some background research.