Most of my investment portfolio comprises FTSE 100 stocks. I’m a risk-averse investor, therefore I tend to focus my attention on the UK’s largest listed companies. In theory, these are less likely to fail, although the returns may not be as high as other riskier types of investments.
Investing £5 a day doesn’t sound like a lot of money. There are plenty of non-essential items that I buy with that amount — things that are nice to have rather than ones that I need to own. By cutting these out, I’m sure I could find £1,825 each year to invest.
However, it doesn’t make sense to invest a small amount each day. Fees will wipe out any benefit. I’m therefore going to assume that I’ll put a lump sum of £1,825 at the start of every year in a FTSE 100 tracker fund.
How long will it take me to become a millionaire?
Doing the maths
According to IG, the FTSE 100 increased by an average annual growth rate of 6.3% between 2011 and 2022. This assumes all dividends are reinvested.
If history is repeated, it’ll take me 58 years to become a millionaire. But I’ll probably be dead by 2081. However, had I started when I was 16, I’d probably have reached my £1m target in my seventies.
By investing the equivalent of £10 a day, I could achieve millionaire status with 47 years. Doubling this to £20 would shorten the period by 10 years.
The table below shows the possible returns from the FTSE 100, based on different amounts being invested over varying periods.
| £ per day (equivalent) | 20 years (£k) | 30 years (£k) | 40 years (£k) | Time to reach £1m (years) |
| 5 | 74 | 162 | 324 | 58 |
| 10 | 147 | 323 | 648 | 47 |
| 15 | 221 | 485 | 972 | 41 |
| 20 | 295 | 647 | 1,295 | 37 |
Regrets
It’s now clear to me that I should’ve started investing much earlier.
I used to work with someone who wanted to retire early. He did everything he could to save. It was rumoured that he used to sit in his airing cupboard to avoid having to turn on the heating. I’ve no idea whether he achieved his goal of retiring at 45, but at least he kept nice and wam.
This behaviour might be a little extreme, but it illustrates the idea that it’s not possible to accumulate significant wealth without starting to save early in life.
When I was 16, I’d have struggled to find £5 a day to invest. But I could’ve started with a smaller amount and increased it as I got older.
Warren Buffett, the American billionaire, is now 92. He made his first investment when he was 14. He’s made over $100bn during his 78 years of investing.
It’s important to remember that the FTSE 100 (and the UK stock market in general) will not necessarily perform in the future as it has in the past. Returns may be much lower, which would lengthen the periods in all of the examples above.
My conclusion is that I could become a millionaire from investing £5 each day. But I doubt I’ll live long enough to enjoy my wealth. However, had I started earlier, it could’ve been a very different story.
