Historically the stock market has offered much better returns than savings accounts over the long term. As a very rough guide, you could realistically expect at least 5% per year on average. It’s always better to use a modest percentage when planning, rather an ambitious one.
Let’s assume that you have £100 per month to put into a savings account or invest in the stock market. As you can see from the tables below, the difference over time is staggering.
Savings Account
10 Years | 20 Years | 30 Years |
£13,271 | £29,479 | £49,272 |
(Above figures calculated on an optimistic 2% interest rate)
Stock Market
10 Years | 20 Years | 30 Years |
£15,528 | £41.103 | £83,225 |
(Above figures calculated on 5% gain per year on average)
Even as little as £25 per month over 30 years (£9,000 total) could grow to £20,806 if you invested it into the stock market (£11,806 profit).
Obviously, these figures are not guaranteed but they are entirely realistic. There will be good years and bad years though, which is why it has to be considered a long-term strategy.