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  • lukeparsons5

Why How Much You Start Investing With Doesn't Matter!

Please note I always assume an 8% return on investment when using any compound interest calculations, this is the annualised ROI of the FTSE 100!

I spend a lot of time researching and number crunching (certified numbers nerd) and I came across something very interesting that I wanted to share with you.

This is especially useful if you're someone who is reluctant to start investing because you feel you do not have enough money right now to make it worth while.

What I recently discovered is that your initial balance is almost irrelevant to your future returns, to a certain extent.

I will explain why!

Your Initial Deposit Is Not That Important

Your initial deposit is the amount of money you start investing with. For most beginner investors, it's not a huge amount (because investing is new and its terrifying and you don't want to lose all of your money!)

A lot of people think you need to start with big amounts, but its far from the truth.

Here's an example...

Meet Fred.

Fred is 21 years old and got a tidy £1,000 bonus from work this month. He's been reading about passive investing and wants to dip his toe into it.

He decides instead of putting £250 per month into savings, he will open a Stocks & Shares ISA and put it in there for the foreseeable future. Along with his £1,000 bonus.

Here's what his ISA would look like when he turns 65...

As you can see, by year 43 he'd be a millionaire!

Nice work Fred!

Now let's meet George.

George is also 21, but he received a £5,000 bonus from his employer this month, and decides to do exactly what Fred did and put it into a S&S ISA, and then add monthly contributions of £250 per month.

Here's what George's ISA will look like when he's 65!

Aha, very interesting!

I don't know about you, but this surprised me.

Despite having £4k extra initially, George only made it to millionaire status a year before Fred. And his balance at 65 is only around £79k higher.

This suggests to me that the regular monthly contributions are more important than the initial balance. Literally every other metric is the same except for the initial deposit, and it made very little difference.

Of course the picture is different if you start putting in higher amounts (as the compound interest curve is exponential).

But for beginner investors, I think this is an encouraging sign that you don't need loads of money to start taking advantage of the compound effect!

So stop waiting and get started with investing today!

Get 0% Investing Fees With Trading212

I use the Trading212 platform to manage my investments, and I'm a big fan of their 0% commission service!

I've never had to pay for a trade, unlike some other brokerages, which means I get to keep even more of my future returns!

If you'd like to get started with Trading212, you can sign up via my referral link here and earn yourself a free share up to £100!

I'll also get one too, so thanks :)

Join Me On A Journey To Financial Freedom

I'm on a personal mission to achieve millionaire status by 2032. My current net worth is £58k.

It's a lofty goal, but I'm convinced I'll do it. You can see my month by month progress by opting in here.

I will send you my monthly income, investment & website all the lessons I am learning on the path to financial utopia, that you can then apply to your own life!

I hope you'll join me on this crazy ride to the top! ;)


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