Today I want to share with you how I’d invest £250 a month in UK stocks.
Did you know that 15% of Brits have no savings at all. 33% of Brits have less than £1500 saved. 66% have no financial plan to invest for the future yet 91% of Brits say they would like to have one.
But is it worth simply saving your money in 2020? With 0.5% interest rates or lower, savings are not beating inflation right now. Meaning that what you can buy with £1000 in 2020 will be a lot less in 2030.
Personally, I would want to put those savings to work by investing and achieving a higher than inflation return at the bare minimum.
In fact, my bare minimum is to beat the FTSE market. The FTSE generates on average about 8% return a year, sometimes less. Meaning that even if you just put your money here, you’d have yourself 8% a year. A better return than simply saving and getting 0.5%.
But I’ve made it even easier to achieve a much higher return than that by investing in UK stocks. And using this same approach you could transform the lives of yourself and the future generations of your family. This is precisely how i’d invest £250 a month in UK stocks.
A £250 a month investment would give you a starting capital of £3000 after Year 1 which you could begin to put to work.
My stock selection criteria has achieved a 35% return per year on average since 2014, but let’s dial that down to a more conservative 25%.
Assuming you continued your deposits of £250 a month (£3000 a year) as your fund grew, at 25% return your £3000 would grow to £36,996 after 5 years.
After 10 years, this would have grown to £140,747. After 15 years, £457,368.
And assuming you didn’t withdraw any of your funds and were still keeping up with your £250 deposits without fail, your £3000 would have grown to £1,423,618 after 20 years.
Of course, none of this includes dividends either, which if re-invested would add significant growth over that period of time.
Now 20 years is a long time. But imagine if you were doing this for your children. Imagine taking a £1m slice of the fund in 20 years time, before passing on a fund of £400,000 to your children and teaching them to invest, continuing this legacy.
Assuming your children continued to pay the deposits of £250 a month into the fund, and sticking with the 25% return per year average, that £400,000 could be turned into a fortune very quickly.
In 5 years it would have grown to £1.2 million. In 10 years, £3.8m. By this point, your children would be set for life. A 3% yearly dividend on your holdings would generate an income of £114,000 a year in dividends alone, without needing to touch the principle.
Again, by 15 years the £400,000 would have grown to £11.7m and after 20 years this figure would have reached £35.8m, generating a yearly dividend of £1 million a year for the children, without touching the £35.8m principle.
Within just one generation, you will have dramatically changed the financial outlook of your family, creating a financial legacy that could grow beyond any limits.
Teaching your family to invest is key to this working of course. Assuming your kids passed on the same legacy to their kids, taking a £20 million slice and passing down a £15.8m starting capital, they would be setup for life without having to lift a finger.
A £15.8m starting capital would be worth £48.2m after 5 years. After 10 years, £147 million. That’s going to generate a £4.4m a year dividend itself.
Of course, you may well be long gone by this point, as we are now 50 years into the future. I’m 37, so I hope to see it happen with my own family.
This may all seem like a pipedream or a fantasy, but it’s the way the rich have been getting richer for long before you and I were born. Learning to invest consistently, in the right stocks, over a long patient time period will get you to this result. It is mathematical fact. But most of us never had the financial education we needed to truly appreciate the value in patient investing.
Can you find a way to make 25% return a year?
The answer to that is….of course. There are big funds out there that can achieve that for you, but they can be hard to get into. Requiring very high minimum deposits of £500,000 or perhaps into the millions. However, there’s some good news, because My CLEAN Watchlist has achieved over 35% a year now for the last 5 years and if your prepared to run your own fund you can find out the very best stocks that I’m investing in each year by joining our Stockpicker Membership Program starting from as little as £20 a month.
So if you want to get started building your portfolio in the right way, becoming part of the top 30% of Brits, and building a financial legacy for your family, head on over to the Stockpicker Membership Program and read more about how to see what stocks I’m picking for myself and why.