Jasmine Birtles
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How to Invest on a £5K Per Month Salary in the UK 2025
Ruby Layram
15th Aug 2025
Earning £5,000 a month might feel comfortable, but if you’re still unsure how to invest it wisely, you’re not alone. The good news? Even with a “normal” salary, you can build a serious nest egg, if you know the right steps. Here’s a practical guide for 2025, packed with examples and portfolio splits to suit your goals.
Also read: How to invest on a £2K per month salary
First, Know Your Priorities
Before you throw your cash into the stock market, it’s important to set your priorities. Start by building an emergency fund with 3–6 months of expenses in a high-interest savings accounts to protect yourself from unexpected costs.
Next, clear any high-interest debt such as credit cards or personal loans, as these can erode your financial progress faster than investments can grow.
Finally, make sure you’re maximising your retirement contributions, especially if your employer offers matching. It’s essentially free money!
Once these foundations are in place, you can invest with confidence and focus on growing your wealth.
Step 1: Decide Your Investing Goals
Investing without a clear set of goals is like going in blind. You need to know where you’re heading to make smart investing decisions.
Different goals require different strategies:
- Short-term goals (0–5 years): Saving for a house deposit or a big purchase. Keep money in cash or low-risk bonds.
- Medium-term goals (5–10 years): Building a fund for children’s education or a big holiday. Mix bonds and equities.
- Long-term goals (10+ years): Retirement or financial independence. Focus on equities and growth assets.
Your portfolio split should reflect your time horizon.
Step 2: How Much to Invest Each Month?
This is where I say something annoying like “it depends“. Because it does! Although, with a £5K monthly salary, a solid rule of thumb is:
- 20%–30% of your take home pay to savings and investments (£1,000–£1,500 if the £5K is after tax).
- Adjust depending on expenses, goals, and lifestyle.
This amount may seem small compared to your salary, but thanks to compound growth, it can grow into a substantial pot over time.
Step 3: Choosing Your Investment Accounts
Once you know your goals and how much you want to invest each month, you will need to choose an investment account to store your portfolio.
Check out our rundown of the best UK investment platforms for inspiration.
Here is an overview of some of the most popular types of investment account:
- Stocks & Shares ISA: Up to £20,000 per year, tax-free growth and dividends. Perfect for medium- and long-term investing.
- Pension (SIPP or workplace): Tax relief upfront makes this one of the most powerful tools for long-term growth.
- General Investment Account (GIA): For extra investing beyond ISA limits, but keep an eye on capital gains tax.
A smart mix of these accounts can supercharge returns while keeping taxes low.
Example Portfolio Splits
I know that it can be useful to see examples of other investor’s portfolio (who doesn’t love a good snoop!). Although we can’t outwardly show you other people’s investment, here’s how you might split investments depending on your goal:
A. Growth-Focused Portfolio (Long-Term Retirement)
- 80% global equities (UK + international)
- 10% bonds (UK gilts or corporate)
- 10% cash for emergencies or opportunistic buys
Why: Most returns come from equities, but some bonds cushion against crashes.
B. Balanced Portfolio (Medium-Term Goals)
- 50% equities
- 40% bonds or index-linked gilts
- 10% cash
Why: You still get growth, but lower volatility protects your medium-term plans.
C. Conservative Portfolio (Short-Term Goals)
- 70% cash & high-interest savings
- 20% short-term bonds
- 10% equities
Why: Minimises risk so your money is safe when you need it soon.
Tip: Keep Costs Low and Automation High
Fees kill returns quietly. Look for:
- ETFs or index funds with expense ratios under 0.25%.
- Robo-advisors that automatically rebalance your portfolio.
Set up direct debits for investing, so you’re consistent without thinking about it. Lazy investing often wins in the long run.
Don’t Let Market Noise Panic You
Stock markets rise and fall. Headlines are designed to grab attention, not guide your decisions. Stick to your plan, rebalance yearly, and ignore the noise.
If you’re plan is to build long-term wealth, expect to experience a few market highs and lows. The key is to trust the process.
Bonus: Side Hustle for Extra Investing Fuel
Even an extra £200–£500 a month invested consistently can significantly speed up wealth-building. Look for side hustles, freelance work, or passive income opportunities.
Final thoughts:
Earning £5K per month in the UK puts you in a fantastic position to build wealth for yourself- even if you can only afford to invest 5% of your income each month.
The secret to success is consistency. A one-off investment will get you nowhere. But monthly contributions over 20 years? That adds up to a lot!
I recommend taking a look at the example portfolio splits and using an AI investing tool such as Tori to determine the best strategy for you. And then it’s just about sticking to it.
Are you interested in learning more about investing? Why not sign up to the MoneyMagpie bi-weekly Investing Newsletter? It’s free and you can unsubscribe at any time if you find it isn’t for you.
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.
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