How investing £250 a month could make you a future millionaire!

Even small monthly investments can generate considerable wealth. It just takes time, discipline and a good strategy.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

It really is possible to become a millionaire by investing regularly. This is not a quick route to millionaire status by any stretch of the imagination, but it’s a great way to save a nest egg for retirement.

Committing to regular investments

Investing just £250 a month over four decades could help you realise a very comfortable retirement. Investing this in an index fund with an average annual return of 9% would create a final pot worth close to £1.2m. Providing an annual income of £30k for 40 years.

A lump sum deposit to start with will move the goalposts. Reaching your £1m end goal in a shorter time or at a lower annual interest rate. Equally, with a higher monthly contribution, you’ll hit the million-pound mark in less time.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Here are some examples of how this works.

If you invest that same £250 a month at an interest rate of 5%, then four decades later the total sum would be approximately £383,000.

If you have a lump sum to get started with, then the regular monthly investment can realise a greater fortune. By investing an initial £10k, followed by £250 a month at an average annual interest rate of 9% for 40 years, you’ll achieve a final pot worth over £1.5m.  This equates to an annual income of £37.5k for 40 years.

Adjusting the monthly investment, increasing the percentage return or starting with a lump-sum deposit, will affect the final amount achieved.

Long-term investing

Investing in the stock market is a great way to reap the benefits of compound investing and achieve annual interest rates for your savings that beat regular cash account savings rates with a bank.

The four most popular investment vehicles for individual investors are stocks, bonds, mutual funds and exchange-traded funds (ETFs). The amount you get back with each of these varies and the risk attached also fluctuates. The riskier the investment, the higher the returns should be, but equally, more risk means just that, so you could end up losing more than you invested.

I think long-term stock market investing is the most sensible option. It’s the style advocated by Warren Buffett, one of the most successful investors ever. 

FTSE returns

The UK financial indices have produced good returns for investors in recent years. Over the past decade, the FTSE 100 has given us an average return of 7% and the FTSE 250 has produced an average annual return of 11%.

These returns are far better than bank account interest rates. I think an index tracker, that aims to echo one of these indices, is a great investment vehicle. It’s a simple, but an often lucrative way of investing regularly.

Reinvesting dividends is also the key to long-term wealth for long-term stock market investors. By earning interest on your interest, it unlocks the power of that compounding I mentioned above. This is how you rapidly increase your savings and ultimately reach your millionaire goal.

Do you have the discipline required to become a future millionaire? The earlier you start, the better.

This AI stock is attracting investors like Michael Bloomberg and Peter Thiel…

Why are these legendary investors, already wealthy beyond imagination, drawn to this opportunity? The allure lies in more than just potential returns; it's a vote of confidence in a company poised for long-term success.

Imagine a revolutionary AI company that's not just participating in the digital media landscape but reshaping it entirely.

Trusted by giants like Amazon, Disney, and Netflix, the company reported nearly £637 million in revenue last year, marking a robust 7.8% growth over three years. Its impressive market reach and spirit of innovation are just the beginning of its story.

Best of all, we’re thrilled to offer you an exclusive glimpse into this game-changing AI investment, absolutely free.

Get your free AI stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

3 high-yield dividend shares to consider buying for a retirement portfolio

Dividend shares can provide retirees with regular passive income in their golden years. Our writer picks out three with yields…

Read more »

Investing Articles

Tesla stock has halved. Could it now double – or halve again?

After a wild few months for Tesla stock, Christopher Ruane weighs some pros and cons of the investment case. Could…

Read more »

Investing Articles

Does it make sense to start buying shares as the stock market wobbles?

Does a rocky stock market make for a good or bad time to start buying shares? This writer reckons it…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£15k of passive income a year? It’s possible with the right dividend strategy!

To figure out how much dividends are needed for a lucrative passive income stream, investors must understand which strategies get…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

As US markets wobble, I’m listening to Warren Buffett!

The long career of billionaire investor Warren Buffett has included plenty of market turbulence. Here's what our writer's learnt from…

Read more »

UK money in a Jar on a background
Investing Articles

5 shares yielding over 5% to consider for a SIPP

Christopher Ruane introduces a handful of FTSE 100 and FTSE 250 shares he thinks an income-focussed SIPP investor should consider.

Read more »

Investing Articles

Here’s how an investor could invest a £20k ISA to target £1,500 of passive income per year

Can a £20,000 ISA throw off close to £30 per week on average of passive income when invested in blue-chip…

Read more »

Investing Articles

As gold hits $3,000, this FTSE 100 stock is primed for blast off

As Western institutions scramble to get as much gold as they can lay their hands on, Andrew Mackie believes this…

Read more »