It’s often thought that a lot of money is required to start investing. However, this couldn’t be further from the truth. Today, the process can begin via a Stocks and Shares ISA with £100 or less.
Now obviously, investing just £100 is unlikely to make you rich anytime soon. But if you invest that amount on a regular basis, it can add up over time. Here’s a look at how much £100 invested a month in an ISA could be worth in 10 years.
Stocks and Shares ISA returns
With a Stocks and Shares ISA, there’s no set or guaranteed return. Ultimately, your returns are going to largely depend on what financial instruments you invest in and how they perform.
Fees can also have an impact on returns however. And starting with just £100 a month, it’s sensible to go for an ISA provider that offers very low (or no) trading fees.
A good starter investment?
Most ISAs offer many different investments. Stocks, funds, exchange-traded funds (ETFs), and investment trusts are some common options.
For those starting out, I think low-cost global stock ETFs are a great option to consider (assuming you don’t have to pay hefty trading fees every time you invest). These generally offer exposure to hundreds or thousands of different stocks, allowing an investor to spread capital out and reduce risk levels.
An example of this type of ETF, and one that could be worth considering, is the Vanguard FTSE All-World (Acc) (LSE: VWRP). This is available on low-cost platforms such as Trading 212 and Vanguard.
This ETF allows exposure to around 3,600 stocks. And all the big names, such as Apple, Nvidia, and Amazon, are in it.
Meanwhile, ongoing fees are very low. Currently, annual charges for this fund are just 0.22%.
Over the last five years (to the end of March), this product returned about 100%, or 15% a year (before platform fees and trading commissions). However, past performance isn’t a good indicator of future returns.
Over the last five years, global stock markets have had a great run. Looking ahead, economic weakness and/or geopolitical instability could lead to lower returns for investors.
Growing £100 a month
Generally speaking though, these types of global ETFs tend to provide a return of around 7-10% a year over the long term. And with that kind of return, money can grow quickly.
Going back to the investor putting £100 a month into an ISA. Let’s say they were able to achieve a return of 8.5% a year over a decade with a global stock ETF (after all fees). At the end of the 10-year period, they’d have about £18,400.
That’s a decent amount, and it could potentially be used for a home deposit or for retirement savings. Not a bad result from just £100 a month.
