5 legal things you need to know about second income tax
Making money online quickly without investing too much is the ultimate goal for some. It might seem unattainable but, with a bit of effort and savvy decision making, you can turn extra cash into a solid investment to work toward building up a substantial sum.
Think of these steps as the first stage in making bigger amounts later down the line.
Whether you only have a few spare pounds or a little bit more to play with, we’ll show you quick and simple ways you could consider investing your money online and begin building up another source of income.
OK, it might not be ‘fast’, but if you want to invest £20 or less with minimum risk, get started by saving. Opening a savings account that offers interest on your deposits is a simple yet effective way to make your money work for you.
With an ISA, you can begin earning tax-free interest on your savings. A cash ISA is a low-risk option that allows you to build up a steady income from the interest you earn on the money sitting in your account.
While £20 might not sound like a lot, it’s a great start if you’re serious about saving for the future. For example, investing £20 a month for 10 years at an 8% growth rate could give you more than a £1,000 return. It means really playing the long game, but don’t forget some investments don’t guarantee a pay-out like that.
Different ISAs will have different terms and conditions, depending on the provider, so it’s important to shop around to find one that suits your circumstances.
For a short-term saving solution, you could consider downloading a micro-savings app that takes the responsibility out of your hands. Designed to help you tuck away minuscule amounts so you hardly realise you’re saving anything at all, it might be one of the easiest ways to build up a rainy day fund.
Apps like Chip sync with your chosen debit card and analyse your spending habits, using an algorithm to decide how much to add to your in-app savings account. You can choose to pause, increase, or reduce the amount you’re saving, or manually transfer additional funds into your account. When you’re ready to withdraw, you can do so via the app.
Many micro-savings apps are free to download – they might even do things like give you interest for each friend you invite to join.
You don’t have to be a Wall Street mogul to build up a successful investment portfolio. These days, there are plenty of intuitive websites and apps designed to help you find the best ways to spend and grow your spare cash.
It’s important to keep in mind that, as with many modes of investing, there’s always a risk that you’ll lose more than you put in. These kinds of sites tend to offer different options based on how much of a risk you want to take with your money, so you can decide how to approach your portfolio.
Nicknamed ‘robo-advisers’, you can sign up quickly online to a digital investment service, which will help you to begin investing your money in minutes.
Typically, you’ll fill out a questionnaire that helps the ‘robots’ understand how much you can afford to invest, what your desired return is, and your risk tolerance – aka, how ‘safe’ you want your investments to be. From there, they’ll do all the work for you, using your information to make decisions about how to run your portfolio.
Some of these services require you to invest higher amounts, but organisations like Wealthify allow you to sign up for free and get started with as little as £1. From there, you’re charged a fee based on the profit you make, and you can keep tabs on your activity with the user-friendly app or website.
If you want to build up your investment portfolio without much effort at all, Moneybox makes robo-advising even simpler.
In a similar way to how micro-savings apps interact with your savings, it takes minuscule amounts out of your bank account by rounding up your purchases to the nearest pound. It then applies the spare change to your investment portfolio – so if you spend £1.20 on a coffee, it’ll take 80p and invest it for you.
You can decide how you want to invest by picking one of the three profiles – cautious, balanced, or adventurous – which are designed to allocate your funds to different investments, based on your chosen risk factor.
The first three months are free, and after that Moneybox charges a £1 subscription fee. It also charges a platform fee and fund provider fees.
If you’re really serious about taking your existing cash and turning a profit, it can help to seek professional insight from a living, breathing human who has experience in the world of investments.
Sites like vouchedfor.co.uk and unbiased.co.uk will help you find a financial advisor quickly online, and the initial conversation you have with them is often free. By investing £100 in any follow-up meetings they could tell you how best to arrange your finances and if there are any opportunities for saving or investment you’re not capitalising on.
Typically, they’ll talk to you and get to grips with your financial situation, so they understand how much you can afford to invest and what your desired outcome is. Then they’ll tell you the best way to achieve those goals.
Is it fast? Seeing a return might take some time, but you’ll quickly be getting advice that could put you on more solid financial ground in the future.
Depending on who you work with, they may charge you a fixed, percentage, or hourly fee, and so it’s best to find someone who will agree to a rate that reflects what you’re putting in and getting in return.
There are plenty of clever ways to take your existing cash flow and make it work for you.