Regular small investments in major index funds have delivered notable long-term returns, according to new figures from AJ Bell. The data suggests that consistent monthly contributions of £25 into broad equity trackers over the past decade would now be worth more than £6,000 in some cases.
The findings highlight how modest, automated investing can build substantial sums over time. At a moment when hundreds of billions of pounds remain in low-interest cash accounts, the numbers offer a clear illustration of how long-term exposure to global markets has rewarded patient savers.
According to AJ Bell, investing £25 per month into the iShares US Equity Index over the last 10 years would have produced an investment pot worth £6,307. The same monthly contribution into the FTSE All World Index Acc fund would have grown to £5,646 over the same period.
These figures arrive amid concerns about low levels of direct equity ownership in the UK. According to the Social Market Foundation, just 8% of household wealth is held directly in equities, the lowest share among G7 nations.
Long-Term Investing and the Impact of Steady Contributions
Laura Suter, director of personal finance at AJ Bell, said the data demonstrates the “powerful impact of investing little and often.” She noted that investing does not require large lump sums or precise market timing to produce meaningful outcomes.
“If you put away just £25 a month, less than £1 a day, you could build up a tidy pot after a few years,” she said. According to figures shared by the firm, assuming annual growth of 6% after charges, a saver contributing £25 per month would accumulate £1,793 after five years and £4,191 after 10 years. Extending that pattern to 15 years would result in just over £7,400, rising to almost £11,700 after 20 years.
The data also shows how increasing contributions over time can alter outcomes significantly. Suter suggested that investors could raise their monthly payments in line with wage growth. According to AJ Bell, applying a 5% annual increase to the original £25 monthly contribution would lift the payment to around £38.75 by year 10. Under the same 6% growth assumption, that approach would produce £5,150 after 10 years and £17,612 after 20 years, nearly £6,000 more than keeping contributions fixed.
Cash Savings, Inflation and First-Time Investor Guidance
The broader context underlines why such comparisons are being made. The Social Market Foundation has warned that £430 billion held in cash or low-interest savings accounts is being eroded by inflation. According to the think tank, households could potentially generate stronger long-term returns through investment, provided risks are understood.
Suter stressed that investing is not suitable for every circumstance. She advised that expensive debts should be repaid first, as the interest charged on credit cards or overdrafts can outweigh potential investment gains. She also said that money needed within five years is generally better held in cash, including emergency savings or funds earmarked for major purchases.
For those new to markets, she pointed to diversified “all-in-one” funds or low-cost tracker funds that mirror broad global indices such as the MSCI World. Investors, she added, should ensure they understand what they are buying and why it is expected to generate returns.
