Invest £5k – Best Ways To Invest £5,000 In The UK

If you’ve got £5k ready to inject into the investment markets – you have plenty of options at your disposal. This covers everything from blue-chip stocks, ETFs, index funds, bonds, gilts, commodities, and even digital currencies like Bitcoin.

In this guide, we discuss the best ways to invest £5k in the UK and which trading platforms you might want to consider for the job. We also walk you through the step-by-step process of investing £5k at a top-rated FCA broker.

#1 Broker to Invest £5k – eToro

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  • Ability to copy more experienced investors and their decisions
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How To Invest £5k in the UK – Choose a Broker

When choosing a broker to invest funds online, you need to look at fees, regulation, payments, supported markets, and customer service. Below you will find an overview of the best brokers in the UK that allow you to invest £5k safely. 

  • eToro – Overall Best Place to Invest £5k in the UK
  • Capital.com – Low-Cost Broker With 4,000+ Commission-Free Markets
  • AvaTrade – Trade the Financial Markets at 0% Commission

If you’re unsure which broker is right for you and your financial goals – you will find full reviews of the above providers further down.

Best Ways to Invest £5k in the UK – Overview

Below you will find the very best ways to invest £5k in the UK.  

  1. iShares Core FTSE 100 UCITS ETF – Overall Best Way to Invest £5k in the UK
  2. Dividend Stocks ETF – Invest £5k into a Basket of Dividend Stocks
  3. US Growth Stocks – Target High-Growth Stocks in the US
  4. Cryptocurrency – Consider Investing £5k into Cryptocurrencies
  5. CopyPortfolios – Invest £5k into a Ready-Made Portfolio

Each asset class comes with its own risks and potential rewards, so you will find an analysis of each financial instrument further down.

How to Invest £5k in the UK – A Quick Guide For 2021

If you’re ready to invest £5k into the financial markets right now, the steps below you show you how to complete the process with eToro in under five minutes.

  • Step 1: Open an Account with eToroTo get the ball rolling, open an account with eToro. This will require you to enter your name, home address, date of birth, mobile number, and other personal details.
  • Step 2: Upload ID – To remove restrictions on your account, upload a copy of your driver’s license or passport.
  • Step 3: Deposit Funds – Meet the $50 (about £36) minimum deposit amount by funding your account with a debit card, credit card, e-wallet, or bank transfer.
  • Step 4: Search for Asset – Use the search box at the top of the page to find the asset that you wish to invest in. eToro supports thousands of stocks, ETFs, forex, commodities, cryptocurrencies, and more.
  • Step 5: Invest £5k – Finally, enter your stake into the ‘Amount’ box and click on the ‘Open Trade’ button to complete your £5k investment!

The above process is explained in more detail further down in this guide.

67% of retail investor accounts lose money when trading CFDs with this provider.

Step 1: Where to Invest £5k  – Full Broker Reviews

The most important metric to consider when thinking about how to invest £5k is to ensure you choose a suitable broker for your skillset. You also need to check what markets the broker supports and how much it charges in fees and commissions.

To help clear the mist, below we review the best brokers that allow you to invest £5k in the UK.

1. eToro – Overall Best Place to Invest £5k in the UK

bitcoin today

eToro is a leading online broker and social trading platform that gives you access to a huge number of markets. The broker is authorized and regulated by the Financial Conduct Authority (FCA) and partnered with the Financial Services Compensation Scheme (FSCS). Plus, with more than 20 million traders on its books – eToro is clearly one of the most popular brokers in the UK. In terms of what you can invest £5k into, eToro offers access to 17 stock exchanges.

This includes markets in Germany, the US, France, Suadi Arabia, Hong Kong, and of course – the UK. If you’re thinking about buying individual stocks, you can do so at eToro without paying any share dealing fees. If the stock is listed in the UK, you will avoid paying any stamp duty tax on the purchase, as this is waivered by eToro. You can also invest in ETFs at eToro without paying any commissions, and the minimum amount per trade is just $50 (about £36).

etoro review

In addition to stocks and ETFs, eToro is also strong when it comes to cryptocurrencies. The broker allows you to invest in over 30+ digital assets at a minimum stake of $25 (about £18). This covers everything from Bitcoin, EOS, and Litecoin to XRP, Ethereum, and Dogecoin. For those looking to invest £5k in alternative markets, eToro also offers forex, precious metals, energies, and indices. Irrespective of which asset you decide to purchase, the investment process at eToro is very simple.

All you need to do is open an account, deposit some funds, search for your desired market, and finally – complete your investment. If you need a little bit of help making investment-related decisions, you might consider the eToro Copy Trading tool. This enables you to copy a trader that uses the eToro platform. In other words, anything that the trader buys or sells will be replicated in your own account. The broker also offers CopyPortfolios.

etoro app review

As we explain later, these are ready-made investment portfolios managed by the eToro team. You might also find the eToro mobile app handy, which is available on iOS and Android devices. This will allow you to keep tabs on your £5k investment no matter where you are. Finally, in terms of deposits and withdrawals, you can fund your account with a debit/credit card, UK bank transfer, Paypal, or Skrill. The minimum deposit for UK investors is now just $50 – so you will have no issues depositing £5k.

 

Pros

  • Invest in stocks at 0% commission and ZERO stamp duty
  • Minimum investment per stock investment is $50
  • Supports debit/credit cards, e-wallets, and bank transfers
  • Regulated by the FCA and covered by the FSCS
  • Used by over 20 million people
  • Perfect for beginners
  • Social and copy trading tools

Cons

  • Perhaps too basic for technical traders
  • No support for MT4 or MT5

 67% of retail investor accounts lose money when trading CFDs with this provider.

2. Capital.com – Low-Cost Broker With 4,000+ Commission-Free Markets

capital.com review

If you have a bit of experience in trading financial assets – you might want to consider Capital.com. By investing your £5k into this platform, you will have access to thousands of CFDs and spread betting markets. Both of these instruments are financial derivatives, which means that you can conveniently trade assets without taking ownership. This allows you to enter and exit positions on a short-term basis alongside leverage.

At Capital.com, you can trade leverage within FCA limits, which means up to 1:30 on major forex pairs, 1:20 on minors and gold, and less on other markets. This means that you can trade with a lot more money than you have in your account. Additionally, when you trade at Capital.com, you will not pay any commissions. This is in conjunction with the broker’s low-spread policy and fee-free deposits and withdrawals.

capital.com review

Another benefit of using Capital.com is that you can choose from a long or short position on all supported markets. For instance, if you think that the value of oil will decline, you simply need to place a sell order. If the instrument goes down in price and you close the trade – you will make a profit. When it comes to supported assets, you will find thousands of stocks and ETFs from a wide range of UK and international markets.

You will also find commodities, indices, index funds, forex, and more. The minimum deposit to get started at Capital.com is just £20 (£250 on bank wires) – and you can choose from a debit/credit card or e-wallets like Apple Pay or Paypal. Finally, in terms of security and investor protections, Capital.com is regulated by the FCA, and your capital is covered up to the first £85,000 in the event of a brokerage collapse via the FSCS.

Pros

  • Top-rated spread betting and CFD broker
  • Licensed by the FCA
  • £20 minimum deposit (debit/credit cards and e-wallets)
  • 0% commission on all markets
  • Tight spreads and no fee on deposits or withdrawals
  • Supports thousands of financial markets
  • Convenient for newbies

Cons

  • Experienced traders might consider the broker too basic
  • £250 minimum deposit on bank transfers

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.25% of retail investor accounts lose money when trading spread bets and/or CFDs with this provider.

3. AvaTrade – Trade the Financial Markets at 0% Commission

avatrade review

If you like the sound of short-term trading, AvaTrade is another CFD platform that is popular in the UK. Regulated by over seven reputable financial bodies, this platform takes investor protection very seriously. You can easily get started with a minimum deposit of just £100 – which can be funded with a UK bank transfer or debit/credit card. At AvaTrade, you will have access to a huge number of markets, all of which can be traded with leverage.

Once again, this falls within the limits stipulated by the FCA. We would suggest that AvaTrade is potentially more suited for those of you with an understanding of technical analysis. This is because the platform comes packed with advanced chart reading tools and indicators. You can also trade via MT4 or MT5, both of which are aimed at experienced traders. Supported asset classes at this platform include stock CFDs from the UK and US markets.

avatrade review

You can also trade dozens of forex pairs, with the platform covering majors, minors, and exotics. Plus, if you have an appetite for commodity trading, AvaTrade offers everything from gold and silver to oil and natural gas. Other supported markets include ETFs and indices. However, only professional clients have access to cryptocurrencies. So, if trading digital assets like Bitcoin is something that interests you, eToro is the best broker for the job.

Nevertheless, AvaTrade is very competitive when it comes to trading fees and commissions. Not only are spreads super-tight across most markets, and you won’t be charged any commissions when you enter and exit a position. Furthermore, AvaTrade doesn’t charge any deposit or withdrawal fees – which is especially useful if you are looking to deposit £5k. Finally, AvaTrade also offers a free demo trading facility, which might be worth considering if this is your first time buying and selling leveraged financial products.

Pros

  • Regulated in seven jurisdictions
  • 0% commission on all supported markets
  • Offers spread betting and CFD instruments
  • Minimum deposit of just £100
  • Free demo account
  • Supports MT4 and MT5
  • Paypal accepted

Cons

  • Spread betting department limited to just 200+ financial markets
  • No support for instant bank transfers

Trading CFDs and FX Options entail risk and could result in the loss of your capital.

Step 2: Best Way to Invest £5k  – Choose an Investment

Once you have selected a broker that takes your interest, it’s then time to do some research into which asset classes you wish to invest in. When thinking about the best ways to invest £5k in the UK, you need to consider the risks and potential rewards of each instrument. In other words, the more risk you are willing to take, the more you should expect in terms of financial gains. 

If you’re not sure which assets are right for your financial portfolio, below we review five of the best ways to invest £5k.

iShares Core FTSE 100 UCITS ETF – Overall Best Way to Invest £5k in the UK

If you are a stock market newbie that doesn’t have much experience in financial analysis, one of the best ways to invest £5k in the UK is through an index fund. These are backed by providers like iShares and Vanguard, and they give you access to hundreds, and in some cases, thousands of individual stocks and shares. In particular, if you are planning to invest in the UK stock market, then the best way to invest £5k for this purpose is the iShares Core FTSE 100 UCITS ETF.

As the name suggests, this is an index fund that tracks the performance of the FTSE 100. For those unaware, this index contains 100 of the largest UK-based companies that are listed on the London Stock Exchange. By going through the iShares Core FTSE 100 UCITS ETF, you will indirectly hold shares in all FTSE 100 companies – which is great for diversification purposes. iShares will weight each stock within its portfolio to reflect the total market valuation of the respective company.

ftse 100

For example, AstraZeneca, Unilever, and HSBC contribute the largest weighting at just over 7%, 5%, and 4% respectively. Next up is Diageo, GlaxoSmithKline, BP, and Royal Dutch Shell. Other leading companies that you will be gaining exposure to include Royal Mail, Tesco, British American Tobacco, Rio Tinto, and dozens more. If and when the price of the FTSE 100 increase, as will the value of your iShares Core FTSE 100 UCITS ETF investment.

Plus, as many of the firms listed on the FTSE 100 pay dividends, you will be entitled to your share. For example, if you were to invest £5k into this index fund and it yields an annual dividend yield of 4%, you would receive a payment of £200. To invest in this popular FTSE 100 ETF, you can complete the process through eToro. In doing so, you only need to meet a $50 minimum and most importantly – you will not pay any commissions or stamp duty.

FTSE 100 Pros

  • Overall best way to invest £5k
  • Invest in all FTSE 100 companies
  • Rebalanced every three months
  • Each stock is weighted based on market capitalization
  • Low fees
  • Dividends paid quarterly

FTSE 100 Cons

  • The FTSE 100 doesn’t perform as well as the Dow Jones or S&P 500
  • You won’t be able to add or remove stocks

 67% of retail investor accounts lose money when trading CFDs with this provider.

Dividend Stocks ETF – Invest £5k into a Basket of Dividend Stocks

When you invest in stocks, there is every chance that you will be paid a quarterly dividend. This is a way for the company in question to share some of its profits with existing shareholders. Now, although there are thousands of dividend stocks to choose from on a DIY basis – unless you have some experience in this market, you are much better off going through an ETF. The reason for this is that your chosen ETF provider will buy and hold top-performing dividend stocks on your behalf.

Not only does this allow you to take a backseat approach to the investment process, but you have the chance to diversify across dozens or even hundreds of dividend stocks through a single trade. Perhaps the best way to invest £5k in this regard is through the iShares Core High Dividend ETF. Put simply, this ETF holds 75 stocks that have a sustainable track record of paying dividends. In fact, some of these companies are known as Dividend Aristocats.

iShares Core High Dividend ETF

This means that they have increased the size of their payment every quarter for at least 25 consecutive years. All of the firms contained within the iShares Core High Dividend ETF are based in the US. To give you an idea of which companies you will be investing in, the largest holdings are given to Exxon Mobil, AT&T, Chevron, Johnson & Johnson, Verizon Communications, and Procter & Gamble. Other notable constituents include Coca-Cola, Pepsi, McDonald’s, Cisco, 3M, and Duke Energy.

Dividend Stocks ETF Pros

  • Invest in solid companies that pay dividends
  • No need to choose stocks yourself
  • Receive a dividend payment every three months
  • Still benefit from capital gains growth
  • Very low fees
  • Less risky – as dividend stocks are often market leaders

Dividend Stocks ETF Cons

  • No guarantee that each dividend stock will continue making contributions 
  • Many stocks halted dividend payments in the midst of COVID-19 

 67% of retail investor accounts lose money when trading CFDs with this provider.

US Growth Stocks – Target High-Growth Stocks in the US

There are many types of stocks that you can invest £5k into. For low-risk investors, blue-chip stocks are typically the most preparable, as they come with the least amount of volatility. However, returns from blue-chip stocks will be somewhat modest. With this in mind, if you are looking to invest £5k into a market that gives you the opportunity to make above-average returns, it might be worth considering growth stocks.

These are stocks that operate an unproven business model – meaning that they are just at the very start of their corporate journey. In turn, this means that you have the chance to invest in growth stocks at a favourable price, and thus – the returns on offer can be attractive. Although there are a number of growth stocks listed in the UK, we would suggest focusing on the US market. In particular, growth stocks from within the technology industry have outperformed the wider market for some time now.

tesla stock price

For example, while most industries suffered the impact of the COVID-19 pandemic, US growth stocks offering tech-based services performed extremely well. A great example of this is Square, which went from $43 per share in March 2020 to over $220 just one year later. Tesla is another US-based growth stock to keep an eye on, with the electric car company also having a tremendous 2020. For example, while you would have paid just $85 in March 2020, Tesla closed the year at over $700 per share.

US Growth Stocks Pros

  • US growth stocks offer huge upside potential
  • Invest while the company is still young
  • Growth stocks are often involved in innovative technologies
  • Many growth stocks were not impacted by COVID-19
  • You can diversify across dozens of growth stocks to reduce your exposure

US Growth Stocks Cons

  • Growth stocks rarely pay dividends
  • High risk – no guarantee the company will meet its goals 

 67% of retail investor accounts lose money when trading CFDs with this provider.

Cryptocurrency – Consider Investing £5k into Cryptocurrencies

In a similar nature to growth stocks, cryptocurrencies offer a much higher risk/reward ratio. On the one hand, many cryptocurrencies have generated unprecedented returns in recent years, with some projects increasing by over 10,000% in 2021 alone. On the other hand, some cryptocurrencies have lost virtually all of their value since launching – so this industry is clearly fraught with risk. However, if you are happy to take on enhanced risk to target much higher market returns, cryptocurrencies might be worth considering.

If you were to invest £5k into cryptocurrencies, you would first need to decide which projects are best suited for your portfolio. Some of the leading cryptocurrencies in this respect – in terms of market capitalization, include Bitcoin, Ethereum, Cardano, Litecoin, Dogecoin, EOS, Solano, and Ripple. These projects all carry a multi-billion dollar valuation and in most cases – have a reasonably solid track record in this industry.

bitcoin price today

You do, however, also have newly listed cryptocurrencies with a small market capitalization. These projects often interest those with a higher tolerance for risk, as the potential returns on offer should the token take-off can be significant. With that said, we would suggest proceeding in a risk-averse manner if you intend on investing £5k in cryptocurrencies. The best way to do this is to create a highly diversified portfolio that contains dozens of different assets.

This way, even if a couple of your crypto assets do not perform well, there is every chance that the rest of your portfolio will. Additionally, when investing in cryptocurrencies, it’s crucial to go through a broker that is regulated by the FCA and permits small stakes. For example, eToro allows you to invest in cryptocurrencies from just $25 (about £18) per trade. With more than 30 digital currencies on offer, this allows you to both diversify and take a dollar-cost averaging strategy.

Cryptocurrency Pros

  • Some cryptocurrencies have generated returns of over 10,000% in 2021
  • More than 12,000 tokens to choose from
  • Very easy to diversify 
  • You can now invest with a debit/credit card
  • The market operates 24/7 – so you can sell any time
  • The best-performing asset class of the past 10 years

Cryptocurrency Cons

  • Cryptocurrencies are highly speculative and volatile
  • You could lose your entire investment

 67% of retail investor accounts lose money when trading CFDs with this provider.

CopyPortfolios – Invest £5k into a Ready-Made Portfolio

We mentioned earlier that eToro is a top-rated broker that allows beginners to invest money into the financial markets without requiring any prior experience. Another great newbie-friendly tool offered by eToro is its CopyPortfolios. Put simply, these are ready-made portfolios that are not only built by the team at eToro – but managed, too. This means that once you invest in a CopyPortfolio, you can sit back and allow your money to work for you.

In total, you will find 46 CopyPortfolios on the eToro website – each of which will target a specific sector or strategy. For example, there is a CopyPortfolio that focuses exclusively on cryptocurrencies. This diversified portfolio contains over a dozen digital assets and it returned over 200% in 2020. Another example of a popular CopyPortfolio is that of the RenewableEnergy instrument. As the name suggests, this ready-made portfolio will give you access to a diversified basket of stocks that operate in the renewable energy industry.

etoro copyportfolios

For example, the portfolio contains everything from First Solar and China Longyuan to Vestas Wind Systems and Ormat Technologies. Ultimately, if you have a niche sector of the financial markets that takes your interest and you wish to invest in a diversified and passive manner, there is sure to be a CryptoPotfolio for you. Best of all, eToro does not charge any additional fees to invest in CopyPortfolios and the minimum stake starts at just $1,000 – or about £730.

CopyPortfolios Pros

  • Choose from 46 ready-made portfolios
  • Lots of assets, sectors, and strategies to choose from
  • 100% passive investment
  • Minimum investment starts at just $1,000
  • Professionally-managed by eToro
  • Cash-out at any time

CopyPortfolios Cons

  • You won’t have any say in which assets are bought or sold
  • No guarantee that you will make a profit

 67% of retail investor accounts lose money when trading CFDs with this provider.

Step 3: How to Invest £5k Today – Detailed Walkthrough

To conclude this comprehensive guide, we are now going to show you how to invest £5k with eToro – an FCA-regulated broker that offers 0% commission stocks, ETFs, and more. The steps below have been simplified – so even beginners can open an account and place their first investment in under five minutes!

Open an Account

You can easily open an account with eToro online or via your mobile phone. Simple head over to the eToro website and look out for the ‘Join Now’ button. You will then be asked to enter some personal information and contact details. This will include your name, address, email, and telephone number.

how to join etoro

Next, as per FCA regulations, eToro will ask you to upload a copy of your government-issued ID – can either be a passport or driver’s license. You will need to complete this step now if you are looking to deposit £5k, as this surpasses the platform’s limit of $2,250. The good news, however, is that as soon as you upload your document – it should be verified in 1-2 minutes.

Deposit Funds

Now it’s time to deposit some funds. If you’re looking to add £5k to your eToro account, the best way to do this is via your debit or credit card. This will ensure that your payment is processed securely and instantly. You can also transfer £5k from your UK bank account, but you might need to wait a few days for the money to arrive. 

Search for Investment

If you are not sure which investment takes your interest, click on the ‘Trade Markets’ button. This will take you to the eToro asset library, so you can view the markets that the broker supports.

etoro index funds

On the other hand, if you know how you want to invest £5k already, you can utilize the search tool at the top of the page. In our example above, we are searching for the ‘iShares Core FTSE 100 UCITS ETF’.

Complete Investment

Now you will need to let eToro know how much you want to invest into your selected asset. This needs to be stated in US dollars, as this is the primary currency of the eToro website. If, for example, you wanted to invest the full £5k right now – this would amount to approximately $6,800. However, if you want to take a more cautious approach to begin with, the minimum investment is just $50.

etoro index funds Once you have decided on your stake, you can confirm the investment by clicking on the ‘Open Trade’ button (‘Set Order’ button if the market is currently closed).

How to Invest £5k UK – Conclusion

In summary, investing £5k into the financial markets will give you the chance of earning much greater yields than a traditional savings account can provide. Whether it’s stocks, index funds, or cryptocurrencies – you do need to remember that all investments carry an element of risk. 

Nevertheless, if you want to invest £5k into your chosen asset class right now, you can complete the process at eToro in under five minutes. This FCA-regulated broker offers thousands of markets – many of which can be accessed on a 0% commission basis. Plus, the broker is super-easy to use, so it’s a great option if you are a newbie investor.

eToro – Best Broker to Invest £5k

1
$50Exclusive promotion
Our score10
  • Invest in a wide range of cryptocurrencies
  • Ability to copy more experienced investors and their decisions
  • eToro crypto wallet included which makes it beginner-friendly
0% Commissionstart TradingOur score 10

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About Kane Pepi PRO INVESTOR

Kane Pepi writes for several high profile publications such as InsideBitcoins, the Motely Fool, and Learnbonds. Based in Malta, Kane is extremely skilled at complex subjects related to financial matters - including a Bachelor’s Degree in Finance, a Master’s Degree in Financial Crime, and actively engaged in Doctorate Degree research, for the money laundering threats of the blockchain economy.