Investing £50 per month: 8.5% interest - why now is the perfect time to start with IG
IG's limited-time 8.5% interest rate offer (until 31 May 2025) makes this an ideal moment for new investors to begin their journey, even with modest monthly contributions of just £50.00.
The power of starting small with regular investments
Starting your investment journey with just £50.00 per month is entirely feasible, especially with platforms like IG that cater to beginners and seasoned investors alike. By leveraging the power of compound interest, even modest monthly contributions can grow substantially over time, particularly when you start early.
The concept of regular investing has gained significant traction in recent years, with more people recognising that building wealth doesn't necessarily require large lump sums. Instead, consistent contributions over time can yield impressive results through the miracle of compounding.
For many, finding £500.00 or £1,000.00 to invest in one go might seem daunting or impossible. But setting aside £50.00 each month – roughly the equivalent of a couple of takeaways or a night out – represents a much more manageable commitment that can fit within most budgets.
This approach to investing aligns perfectly with the principles of pound-cost averaging, where investing regularly helps smooth out market volatility by purchasing more shares when prices are low and fewer when prices are high. This strategy can be particularly beneficial for newcomers who may be concerned about market timing.
IG's current offer: 8.5% interest on uninvested cash
IG is currently offering a compelling opportunity for new UK investors: an 8.5% AER variable interest rate on uninvested cash held in Stocks and Shares ISAs, SIPPs, or General Investment Accounts (GIAs). This promotional rate is available to those who open an account and make an initial investment between 8–31 May 2025. The elevated interest applies to GBP balances up to £100,000.00 and is valid until 31 August 2025, after which it reverts to IG's standard 4.25% AER variable rate.
This offer represents a significant premium over typical savings accounts and even many fixed-term bonds currently available in the market. With Bank of England (BoE) base rates currently at 4.25%, this promotional rate provides an additional 4.25% yield on cash holdings, effectively doubling the current BoE base rate, creating a substantial incentive for new investors.
The timing of this promotion coincides with the new tax year, making it particularly advantageous for those looking to utilise their annual ISA allowance. Opening a Stocks and Shares ISA now allows investors to benefit from both tax-efficient growth and exceptional interest on uninvested funds.
IG's Stocks and Shares ISA, allows you to invest up to £20,000.00 per tax year without paying tax on any capital gains or income. This makes it an ideal vehicle for long-term wealth building, especially for those just starting their investment journey.
For those starting with modest monthly contributions like £50.00, IG’s high interest rate provides an attractive return on cash while you build towards more substantial investments. It effectively eliminates the opportunity cost of having cash sitting idle while you accumulate enough to diversify your portfolio.
Getting started with IG investment accounts
IG offers accessible investment options for those looking to start with smaller amounts.
The IG platform offers several account types to suit different investor needs. A share dealing account provides access to over 13,000 global stocks and Exchange Traded Funds (ETFs), with commission-free trading on UK and US shares for active investors making three or more trades per month in the previous calendar quarter.
For those who prefer a more hands-off approach, IG Smart Portfolios provide professionally managed investment solutions tailored to your risk profile. These portfolios are constructed and managed in collaboration with BlackRock, the world's largest asset manager, offering institutional-quality investment strategies to retail investors.
When it comes to IG’s Smart Portfolio, it's important to note that your IG Smart Portfolio account's initial balance needs to be above £500.00 before your funds are actively invested. If you don't have £500.00 upfront, you can contribute over time until you reach this threshold. Once your balance exceeds £500.00, any further deposits of £250.00 or more will be automatically invested on the same business day between 8.30am and 4.30pm (UK time).
An advantage is that any active Smart Portfolio makes you eligible to earn the current 8.5% (standard BoE interest rate once the promotion has run out) in any other physical IG account.
The mathematical magic of compound returns
To illustrate the impact of starting early, let's compare two scenarios: Investor A begins investing £50.00 per month at age 25, while Investor B starts at age 35. Assuming an average annual return of 5% compounded monthly, the results by retirement age are striking.
Investor A, who began at 25, would have contributed a total of £25,200.00 over 42 years, resulting in an estimated portfolio value of £76,301.00 by age 67. In contrast, Investor B, starting at 35, would contribute £19,200.00 over 32 years, building a portfolio worth approximately £45,000.00 by the same age.
Compound interest chart
This comparison highlights the significant advantage of starting early. By investing for just ten additional years and contributing only £6,000.00 more in total, Investor A ends up with over £30,000.00 more than Investor B. This dramatic difference is entirely attributable to the power of compound returns over time.
Albert Einstein allegedly called compound interest the "eighth wonder of the world," and these figures demonstrate why. The earlier you begin, the more time your money has to grow, with each year's returns generating their own returns in subsequent years, creating a powerful snowball effect.
Building an investment strategy with limited funds
Even with modest monthly contributions, developing a coherent investment strategy is crucial for long-term success. The key is to focus on diversification and long-term growth potential rather than short-term market movements.
For those starting with £50.00 per month, exchange-traded funds (ETFs) often represent an ideal investment vehicle. These funds provide instant diversification across dozens or hundreds of companies, reducing the risk associated with investing in individual stocks. IG offers access to over 1,500 ETFs covering various markets, sectors, and investment themes.
For example, many investors choose to invest in Invesco QQQ Trust Series 1 - often referred to simply as QQQ – which is a widely known and traded exchange-traded fund that tracks the US Nasdaq 100 Index.
Index funds are another excellent option for beginners, allowing you to track the performance of entire markets like the FTSE 100 or S&P 500 with minimal fees. These passive investments have historically delivered solid long-term returns without requiring active management.
As your investment pot grows, you might consider gradually introducing individual company shares to your portfolio. IG's platform allows you to purchase fractional shares of US companies, meaning you can own portions of high-priced stocks like Amazon or Alphabet without needing to buy a full share.
How to maximise your investment journey
There are several key principles that can help you maximise the potential of your £50.00 monthly investments, turning modest contributions into significant wealth over time.
Start early: Time is a crucial factor in investment growth due to compound interest. Every year you delay starting represents a lost opportunity for your money to grow. The current IG promotion offering 8.5% interest provides an additional incentive to begin now rather than later.
Be consistent: Regular monthly contributions, even if small, can lead to substantial growth over time. Setting up an automatic investment plan helps maintain discipline and removes the emotional element from investing, preventing the common mistake of trying to time the market.
Utilise tax-efficient accounts: Consider investing through a Stocks and Shares ISA to benefit from tax advantages. With IG's current promotion, you'll earn 8.5% interest on uninvested cash while enjoying the long-term tax benefits of ISA investing.
Diversify your portfolio: Spread your investments across different asset classes, geographical regions, and sectors to manage risk. Even with £50.00 per month, you can achieve diversification through ETFs and index funds that provide exposure to hundreds of companies.
How to open an account and start investing with IG
Getting started with investing through IG is straightforward, even for complete beginners. Here's how to begin your investment journey with just £50.00 per month:
- Research the different account types available through IG and decide which best suits your needs – whether that's a share dealing account, Stocks and Shares ISA, or Smart Portfolio.
- Open an account with IG by visiting our website until 31 May 2025 to benefit from the 8.5% interest rate promotion on uninvested cash.
- Make your initial deposit, which can be as little as £50.00, though remember that Smart Portfolios require a £500.00 minimum before active investment begins.
- Set up a regular monthly investment plan of £50.00 (or more if your budget allows) to build your investment pot consistently over time.
- Choose your investments based on your risk tolerance, time horizon, and financial goals, taking advantage of IG's research tools and market insights.
For those completely new to investing, IG's educational resources can provide valuable guidance on investment principles and strategies. The platform offers webinars, articles, and video tutorials designed to help novice investors build confidence and knowledge.
The promotional 8.5% interest rate provides a unique opportunity to earn a competitive return on your cash while you learn about the markets and build your investment strategy. This creates a no-pressure environment where you can gradually increase your market exposure as your confidence grows.
Investing with just £50.00 per month might seem modest, but it represents an important first step on your wealth-building journey. With IG's current interest rate promotion and user-friendly platform, there's never been a better time to start turning small, regular contributions into a meaningful investment portfolio for your future.
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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Professional clients trading spread bets and CFDs can lose more than they deposit.
Options and futures are complex instruments which come with a high risk of losing money rapidly due to leverage. They’re not suitable for most investors. Before you invest, you should consider whether you understand how options and futures work, the risks of trading these instruments and whether you can afford to lose more than your original investment.
Trading stocks and shares ‘on margin’ within a US options and futures account – meaning that you only finance part of the cost of acquiring a position in a security – carries additional risks over buying securities on a fully funded basis and may result in losses exceeding your original investment. Trading on margin will also result in additional costs to you as the investor and any securities purchased using margin may be held as collateral by the lender, restricting both your rights as shareholder, and your ability to use the securities until the margin trade is closed. You should familiarise yourself with these risks before trading on margin.
The value of shares, ETFs and other ETPs bought through a share dealing account, a US options and futures account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Some ETPs carry additional risks depending on how they’re structured, investors should ensure they familiarise themselves with the differences before investing.
Share dealing and IG Smart Portfolio accounts provided by IG Trading and Investments Ltd, CFD accounts and US options and futures accounts are provided by IG Markets Ltd, spread betting provided by IG Index Ltd.
IG is a trading name of IG Trading and Investments Ltd (a company registered in England and Wales under number 11628764), IG Markets Ltd (a company registered in England and Wales under number 04008957) and IG Index Ltd (a company registered in England and Wales under number 01190902). Registered address at Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA. IG Markets Ltd (Register number 195355), IG Trading and Investments Ltd (Register Number 944492) and IG Index Ltd (Register number 114059) are authorised and regulated by the Financial Conduct Authority.
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