The power of starting small with regular investments
Starting your investment journey with just £50.00 per month is entirely feasible, especially with platforms like IG that cater to beginners and seasoned investors alike. By leveraging the power of compound interest, even modest monthly contributions can grow substantially over time, particularly when you start early.
The concept of regular investing has gained significant traction in recent years, with more people recognising that building wealth doesn’t necessarily require large lump sums. Instead, consistent contributions over time can yield impressive results through the miracle of compounding.
For many, finding £500.00 or £1,000.00 to invest in one go might seem daunting or impossible. But setting aside £50.00 each month – roughly the equivalent of a couple of takeaways or a night out – represents a much more manageable commitment that can fit within most budgets.
This approach to investing aligns perfectly with the principles of pound-cost averaging, where investing regularly helps smooth out market volatility by purchasing more shares when prices are low and fewer when prices are high. This strategy can be particularly beneficial for newcomers who may be concerned about market timing.
IG’s current offer: 8.5% interest on uninvested cash
IG is currently offering a compelling opportunity for new UK investors: an 8.5% AER variable interest rate on uninvested cash held in Stocks and Shares ISAs, SIPPs, or General Investment Accounts (GIAs). This promotional rate is available to those who open an account and make an initial investment between 8–31 May 2025. The elevated interest applies to GBP balances up to £100,000.00 and is valid until 31 August 2025, after which it reverts to IG’s standard 4.25% AER variable rate.
This offer represents a significant premium over typical savings accounts and even many fixed-term bonds currently available in the market. With Bank of England (BoE) base rates currently at 4.25%, this promotional rate provides an additional 4.25% yield on cash holdings, effectively doubling the current BoE base rate, creating a substantial incentive for new investors.
The timing of this promotion coincides with the new tax year, making it particularly advantageous for those looking to utilise their annual ISA allowance. Opening a Stocks and Shares ISA now allows investors to benefit from both tax-efficient growth and exceptional interest on uninvested funds.
IG’s Stocks and Shares ISA, allows you to invest up to £20,000.00 per tax year without paying tax on any capital gains or income. This makes it an ideal vehicle for long-term wealth building, especially for those just starting their investment journey.
For those starting with modest monthly contributions like £50.00, IG’s high interest rate provides an attractive return on cash while you build towards more substantial investments. It effectively eliminates the opportunity cost of having cash sitting idle while you accumulate enough to diversify your portfolio.
Getting started with IG investment accounts
IG offers accessible investment options for those looking to start with smaller amounts.
The IG platform offers several account types to suit different investor needs. A share dealing account provides access to over 13,000 global stocks and Exchange Traded Funds (ETFs), with commission-free trading on UK and US shares for active investors making three or more trades per month in the previous calendar quarter.
For those who prefer a more hands-off approach, IG Smart Portfolios provide professionally managed investment solutions tailored to your risk profile. These portfolios are constructed and managed in collaboration with BlackRock, the world’s largest asset manager, offering institutional-quality investment strategies to retail investors.
When it comes to IG’s Smart Portfolio, it’s important to note that your IG Smart Portfolio account’s initial balance needs to be above £500.00 before your funds are actively invested. If you don’t have £500.00 upfront, you can contribute over time until you reach this threshold. Once your balance exceeds £500.00, any further deposits of £250.00 or more will be automatically invested on the same business day between 8.30am and 4.30pm (UK time).
An advantage is that any active Smart Portfolio makes you eligible to earn the current 8.5% (standard BoE interest rate once the promotion has run out) in any other physical IG account.
The mathematical magic of compound returns
To illustrate the impact of starting early, let’s compare two scenarios: Investor A begins investing £50.00 per month at age 25, while Investor B starts at age 35. Assuming an average annual return of 5% compounded monthly, the results by retirement age are striking.
Investor A, who began at 25, would have contributed a total of £25,200.00 over 42 years, resulting in an estimated portfolio value of £76,301.00 by age 67. In contrast, Investor B, starting at 35, would contribute £19,200.00 over 32 years, building a portfolio worth approximately £45,000.00 by the same age.