Saving £100 a month in the UK is a good start. It amounts to £1,200 a year and if this amount is invested properly, it will grow into a large portfolio over time.
Let’s dive in further!
How Quickly Will £100 a Month Grow?
Saving £100 a month in the UK can have a meaningful impact over time. Those savings can grow to a sizeable portfolio over the years. If you’re interested in checking how much that adds up to through compounding over long time periods, try the savings calculator below.
Savings Growth Calculator UK
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There are 4 inputs to this saving £100 a month calculator:
- Starting Investment: Enter the current value of your portfolio. If you’re just starting out, then you can default it to £0.
- Monthly Savings: The amount you will commit to your portfolio each month.
- Annual Rate of Return: A safe value to use is somewhere between 6% to 8%. If you are extremely conservative, then you can use 4% to 5%. If you are aggressive, you can try between 8-10%.
- Number of Years: How many years you can contribute the £100 per month.
The calculator shows two charts in the result. The first chart shows your portfolio growth over time when you save £100 (or another amount) a month.
The second shows the same thing, but splits out the components in to your cumulative invested capital (dark blue) and market returns (orange). If you invest for long enough (over 30 years), the market returns will far exceed the total cash you have contributed.
You can take these results and see how your current savings compare against others in the UK.
How long will it take me to save £1 million when saving £100 a month?
If you invest £100 per month in the financial markets, your portfolio can grow to £1 million in 55 years if you earn an average 8% per year. If your portfolio generates 6% per year, you can expect to get in 60 years.
If you’d like to try out other options, do check out the millionaire calculator to see how quickly you can grow your savings!
How Much Should I Save Each Month?
It’s great that you’re able to commit to saving £100 each month. However if you haven’t already done so, it’s worth stepping back for a second and asking a few more basic questions: how much should I save each month?
The amount you should save every month largely depends on these goals. For example, if you’re saving to buy a house, the required amount may be different compared to saving for retirement.
Your income also plays a crucial role in determining the appropriateness of saving £100 per month. For someone earning £30k a year, saving £100 means setting aside 5% of their monthly income. That is a very achievable target!
Last, but not least, expenses play a significant role in determining how much to save each month. Expenses include the obvious like rent, food, but also things like mandatory debt payments on credit cards.
Higher expenses mean you have less money to save. Therefore, it’s important to assess your monthly expenses and work on reducing unnecessary spending.
All of this can be too tough to calculate mentally, so we’ve got a helpful retirement calculator which you can use to plan out in greater detail what your eventual retirement looks like.
It’s important to set a target savings rate that meets your needs and requirements in the short-term and in the long-term. If your future needs are higher and the calculator shows that your portfolio will not grow sufficiently, you may need to step up your savings target to £500 per month.
What’s the best way to invest £100 per month?
The best way to build up a huge portfolio with a £100 a month in savings is arguably through investing. However before we get there, it’s first important to look at the full picture.
- Eliminate debt: As boring and repetitive as it sounds, it makes sense to first eliminate your debt – especially high interest rate debt such as credit card debt or other consumer loans like car loans or those buy-now-pay-later type debt.
- Build Up Your Emergency Fund: Again, another piece of unsexy advice, but it’s important to build up your emergency fund with cash savings that has at least 3 months, but preferably 6 months of expenses. You can invest your emergency fund in a high interest savings account or perhaps even put it in a money market fund.
- Invest it: Finally we get to the most fun piece. It’s important to invest your money in a way that aligns with your needs and risk tolerances. Depending on your needs you may choose to go with balanced funds or perhaps go all out with 100% equity funds. It’s important to manage your portfolio prudently, but being overly conservative is not recommended as you will end up sacrificing long-term returns.
If you need help with this, a good way to start would be to educate yourself and to meet with a financial advisor who has fiduciary duty towards you. They will help you decide how to structure your portfolio.
Before You Go…
Compound interest can turn small investments into significant wealth over time, making it an essential tool for those looking to grow their net worth. We’ve seen how saving and investing £100 a month can help you build up your portfolio over time.
Our whole blog is dedicated to help you get on the path of financial freedom. Feel free to browse around and read through the articles. There are plenty of investment books and podcasts that you can use as a learning resource along the way to help you reach your goal faster.
How much will £100 a month be worth in 30 years?
Saving £100 a month in the UK and investing it over 30 years can lead you to a portfolio of anywhere from approximately £95,000 to £136,000 if you earn 6-8%. The higher the rate of return, the more you will have. If you can generate 10% over that period consistently (a difficult task), you will end up with over £197,000.
How much is £100 a month for 18 years?
Saving £100 a month in the UK and investing it over 18 years can lead you to a portfolio of anywhere from approximately £37,100 to £45,000 if you earn 6-8%. Try out our savings calculator to see how different rates of return and savings periods impact your ending values.