It’s not true that investors need a sizeable wedge of cash to put aside into stocks and shares every month.
A modest amount of cash invested sensibly each month for several years is enough to get started on the road to riches.
Modest has a different meaning for most people, depending on their financial circumstances, but the general minimum saving is just £25 a month.
That’s no more than a night out at the cinema or pub, or that regular subscription to the gym that is unused each month.
Small sacrifices turn into big savings
A small savings sacrifice can really pay off, providing you make the right choices from the start.
First, open a stocks and shares ISA through an online platform that gives 24/7 access to a range of funds.
Putting the money into an ISA means no tax on fund growth or on withdrawing money at any time.
Expats may find no tax advantage
Another place to invest is a regular savings plan that most brokers and funds offer.
Savings programs allow monthly drip-feed investments rather than paying in massive lump sums as most financial firms appreciate that dealing costs and commissions can be far too expensive for the average investor.
Smoothing the way to retirement
A good tip for new investors is to look for the lowest trading costs, fees and commissions as these can make a real difference to the final lump sum.
Drip feeding is also a good way of reducing risk for investors. Paying in £300 over a year smooths market rise and falls, but handing a fund manager in a lump sum could see that market fall on the same day, wiping a significant amount off the capital.
Billionaire investment guru Warren Buffett suggests that for most starter investors, low cost tracker or exchange traded funds. The range of funds is massive, but should give every investor the chance to build a low-risk, diversified fund over the years.
Starting out with a small monthly contribution is just that. The next step is to increase saving as income increases or by making some other spending sacrifices, like that latte every morning on the way to work.
