Unusual ways to invest when you don't have much money

Emma Woollacott
British currency close-up.
British currency close-up.

You might think that you need to be wealthy already before you can consider investing in the stock market.

You might also think that you need to be an expert - or, at the very least, pay a broker or wealth manager who is.

See also: Seven ways to trick yourself into saving

See also: What's the best way to save for Christmas?

However, in recent years a number of new ways to invest have started to appear that are targeted at people with little money to spare and are generally easy to use and low-risk.

Before you start, you should make sure you've paid off any debts or overdrafts - the chances are that you'll be paying more in charges and interest than you'll make back from investing elsewhere.

But if you've got a few hundred quid - or even just a few pounds - to spare, you too may be able to put your money to work.

Microinvesting
The Money Box mobile app launched this time last year, allowing savers to invest in stocks including Netflix, Unilever and Disney with as little as £1 to spend.

The app links to an online bank account, and rounds card payments up to the nearest pound. The small change that's left is then moved into one of three funds, aimed at cautious, balanced or high-risk investors.

Each option contains a different variation of the same three tracker funds - a Henderson cash fund, a Vanguard global equities fund and a Blackrock property equities fund. They invest in over 6,000 global companies within a Stocks & Shares ISA.

Users can also set up regular weekly savings and make one-off deposits.

There are, though, fees to pay: after three months, users must pay £1 a month to subscribe to the service, plus 0.45% a year on the value of their investments. This means that it may not be worthwhile for people who stick to the 'rounding-up' investments, but don't put any more in.

Other services for investing small amounts are available from Nutmeg, which has a minimum of just £500, while Hargreaves Lansdown has a minimum ISA investment of £25 a month.

Peer-to-peer lending
Peer-to-peer lending schemes can offer a high return, with some claiming rates of more than 7%.

Organisations such as Zopa, Funding Circle, Wellesley & Co and Ratesetter match savers with individual borrowers or companies. Borrowers are checked out and rated according to risk, and the platform itself handles the collection of repayments. Some allow loans of as little as £10.

There are certain risks: although most sites have a compensation fund if the borrower defaults, they aren't covered by the Financial Services Compensation Scheme (FSCS).

Property funds
It's hard not to envy property investors, who have made a fortune over the last few decades. However, you don't need to be able to afford a few houses to make some money from the property market.

Property Moose, for example, is a crowd-funding property investment firm that pools small funds from a number of investors. You can invest as little as £10, using a debit or credit card or an online bank transfer. Returns are paid monthly, quarterly, annually or at the end of the specified investment term, depending on the particular investment.

Other similar schemes, such as The House Crowd and Crowdlords, have a bigger minimum investment of £1,000.

Crowdfunding
Many crowd-funding projects simply offer investors a free prototype product in return for helping a company get off the ground. Some, though, give you a financial return, with your cash either buying a share in the company or operating as a loan which is repaid with interest.

Two of the bigger equity crowdfunding operators are Seedrs and Crowdcube, both of which allow a minimum investment of just £10. However, it's worth remembering that most startups fail, so you may never get your money back. Even if you do, it won't be until the business floats on the stock market or you manage to sell your shares - which can often be impossible.

Meanwhile, debt crowdfunding offers investors a regular cash return. Through Abundance Generation, for example, you can lend money to a 'green' project and receive an income payment as well as a return of your capital across the life of a project.




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