Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
How to Invest on a £2K/Month Salary in the UK (2025 Guide)
Ruby Layram
5th Aug 2025
Think you need a six-figure salary to start investing? Think again! If you’re bringing home £2,000 a month after tax, you can start investing, and if you do it right, you might just end up wealthier than your high-earning mates who blow their cash on Deliveroo and £6 oat lattes.
Here’s how to invest comfortably on a £2K/month salary in 2025, without depriving yourself of the fun stuff.
Also read: 5 ‘lazy’ investing tips that could make you your millions
Step 1: Know Your Numbers
Before you invest a penny, you need to know three things:
- Your essential expenses: Rent, bills, food, transport, the stuff you have to pay each month.
- Your lifestyle spending: Eating out, gym memberships, subscriptions, cheeky weekends away
- What’s left over: This is where the magic happens.
Let’s say you spend like this:
- Rent & bills: £950
- Groceries & transport: £350
- Lifestyle: £300
That leaves £400 each month to play with. Even if you invested just £200 of that, you’d be setting yourself up for long-term wins without living like a monk.
Also see: How to invest £500K for monthly income
If I Was Investing on a £2K/Month Salary, I Would Use eToro
I want to take this opportunity to introduce you to one of my favourite investment platforms for budget-concious investors in the UK.
eToro is an excellent platform for investors who want to keep costs low for a few reasons:
- You can start with just $20
- You do not have to pay fees when you buy US stocks
- You can use social trading to gain insight into moves that experts are making
- The platform offers ready-made portfolios that reduce decision paralysis and give you a clear path
Step 2: Pick a Comfortable Percentage to Invest
A good rule of thumb? Start with 10% of your take-home pay. That’s £200 a month on a £2K salary.
Feeling ambitious? Try 15% (£300), just make sure it’s sustainable.
Top tip: Automate it. Set up a direct debit so it leaves your account the day after payday. If you don’t see it, you won’t miss it.
Step 3: Where to Put Your Money for Maximum Growth
So, where should that £200/month go?
If your goal is to build wealth, you will want to choose investments that have potential for growth (no playing it safe and small here!)
Here’s a smart way to split it:
1. Stocks & Shares ISA (via Vanguard, Freetrade, Moneybox, etc.)
- Why? Tax-free growth + long-term investing = powerful combo.
- What to buy? A simple, low-cost global index fund (like Vanguard LifeStrategy 80% or FTSE Global All Cap).
- Return potential: Historically, 6–8% per year over the long term.
Put: £150/month here.
See: The best stocks and shares ISAs in 2025
2. Emergency Savings (if you don’t already have 3–6 months saved)
- Why? Investing is great, but you don’t want to sell your shares when your boiler breaks.
- Where? A high-interest savings account or cash ISA (check Monzo, Chase, or Chip for solid rates).
Put: £50/month here until you build a safety net.
Bonus Option: Workplace pension contributions
If you’re not already, make sure that you’re contributing to a workplace pension! This is a great way to invest for retirement (your future self will thank you!)
- Why? Free money. Your employer often matches your contributions, and you get tax relief too.
- Hack: If your employer matches 5%, contribute at least 5% of your pre-tax income. It’s a stealth investment you barely feel.
What If I Can’t Spare £200 a Month?
No problem. Even £50 or £100 invested consistently over time makes a difference.
What matters most is building the habit, not the amount. And once you get a raise or cut back in other areas, you can increase your investments.
In fact, if you invest £10 per week for 15 years into an investment that returns around 8% per year, you will have around £13,000! You can read more about this in how to turn £10 to £10K.
Most people think, “I’ll start investing when I earn more.”
But if you’re not investing on £2,000 a month, you probably won’t when you’re on £4,000 either, because lifestyle inflation will eat it up.
Starting now, with what you have, is the single most powerful decision you can make.
Final thoughts
You don’t need to be a finance expert to build a long-term portfolio for yourself. The best way to start is to choose a passive ETF and invest little and often to build up confidence.
You can learn more about passive investing here.
As I mentioned, it’s about building a habit that will pay off overtime.
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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
If someone was to start investing this month, by taking into account your monthly contribution, your employer’s match, and the UK’s basic rate tax relief, here are the potential outcomes of your pension pot by the year 2065.
Your total monthly contribution would be:
* Your contribution: £200
* Employer match: £200
* Tax relief (20% of your contribution): £50
* Total monthly investment: £450
Over 40 years (from 2025 to 2065), this will add up to a significant amount. Assuming a couple of different potential annual rates of return for your pension fund, here is a range of what you could have.
Scenario 1: Conservative 5% Annual Return
With an average annual return of 5%, your pension pot could be worth approximately £686,709.07 by 2065.
Scenario 2: More Optimistic 7% Annual Return
With a higher average annual return of 7%, your pension pot could be worth approximately £1,181,166.03 by 2065.
Important considerations:
* These figures are estimates based on the future value of an annuity formula. The actual return on your pension fund can fluctuate significantly.
* The tax relief is calculated based on the basic rate of 20%. If you are a higher-rate taxpayer, you could claim more tax relief.
* This calculation does not account for inflation, which would reduce the purchasing power of your money over time.
* The final amount will also be subject to any fees and charges associated with your pension plan.
It’s a great example of how consistent contributions and the power of compound interest, boosted by employer matching and tax relief, can lead to substantial long-term growth.
As mentioned, the very hardest part is taking the first step and actually investing. I dithered for some years as I’m self-employed and didn’t have much cash over. It also means I don’t get employer’s contributions to a pension, so I took the plunge five years ago and I’m so glad I did and am now taking control of my financial future and looking after myself.
Compounding is a wonderful thing! I usually only invest in dividend stocks, and average 6.5 – 7% return per annum in dividends, not including share growth. Better than bank interest on savings for most of those five years. All dividends are automatically reinvested, and monthly payments to my ISAs are all automated.
Remember – you won’t always get it right, you may even lose on some shares (as I have). Nobody, not even the most experienced investor gets it right all the time, but if you take care with selecting your investments, you’ll get it right more than you get it wrong, and always play the long game.