Millennials: how to get a £1 million investment portfolio by 2050

If 2020 is your year to learn more about investing, and to actually make a start, achieving a £1 million pot in just 30 years may not seem like an achievable goal.

If you’re simply saving your money in cash, you would have to save £33,333 a year, or £2,778 a month. Probably not realistic for most.

But what if I told you it is possible with significantly smaller monthly amounts – thanks to compound interest and taking a bit more risk? I had a look to find out which Elite Rated funds might rise to the challenge.

“Investing is laying out money now to get more money back in the future.” – Warren Buffett

Investing for the long term

While the idea of a thirty-year investment for some is slightly overwhelming, it is a good time period to look at because, for myself and many other millennials, it’ll bring us right into retirement age. And while I don’t relish the thought of being 57 (ancient!), a million pound investment portfolio heading into retirement doesn’t sound awful.

It started me thinking: what could I afford to put into the portfolio over the period? The average pay for a millennial worker in the UK is around £23,700. A while ago a colleague told me that a good way to split your salary is one third on rent or mortgage, one third on bills and going out and one third on savings.

Taking that into account, I looked to see which Elite Rated could help me reach the £1 million mark with £700 invested a month.

Only two Elite Rated funds have managers going back thirty years: ASI Emerging Markets Equity (33 years) and EdenTree Amity UK (32 years). Had someone my age invested £700 a month in the latter 30 years ago, it would have got them very close to the goal line with a pot of money worth £908,806.59*. ASI Emerging Markets Equity however, would have surpassed the goal: it would have produced a pot of month worth £1,056,566.78** after 30 years – with monthly contributions as low as £500 a month.

I decided to broadened my search to find out which Elite Rated funds – that had been in existence for 30 years but had been run by different managers – returned £1 million pounds or more over 30 years, and which one had required the smallest investments to achieve that goal: the winner was Jupiter European. Monthly savings of just £275 were required to get to millionaire status***. Now that is very doable!

Elite Rated funds that returned £1 million or more over 30 years

And of course, the million pound question: could you achieve £1 million in just 20 years? One Elite Rated fund would get you there with £700 a month contributions: Scottish Mortgage Investment Trust returns £1,058,071.66*^^ – although TR Property Investment Trust almost gets you there at £958,969.11*^^ over the same period.

Learn more about how investments trusts could make you a millennial millionaire

*Source: FE Analytics; regular savings, £700 month, 31 Jan 1990 – 31 Dec 2019, total returns in sterling
**Source: FE Analytics; regular savings, £500 month, 31 Jan 1990 – 31 Dec 2019, total returns in sterling
***Source: FE Analytics; regular savings, £275 month, 31 Jan 1990 – 31 Dec 201, total returns in sterling
****Source: FE Analytics; regular savings, £450 month, 31 Jan 1990 – 31 Dec 2019, total returns in sterling
^Source: FE Analytics; regular savings, £550 month, 31 Jan 1990 – 31 Dec 2019
^^Source: FE Analytics; regular savings, £550 month, 28 Feb 1990 – 31 Dec 2019 (previous month data not available), total returns in sterling
^^^Source: FE Analytics; regular savings, £600 month, 31 Jan 1990 – 31 Dec 2019, total returns in sterling
^^^^Source: FE Analytics; regular savings, £650 month, 31 Jan 1990 – 31 Dec 2019, total returns in sterling
*^Source: FE Analytics; regular savings, £700 month, 31 Jan 1990 – 31 Dec 2019, total returns in sterling
*^^Source: FE Analytics; regular savings, £700 month, 31 Jan 2000 – 31 Dec 2019, total returns in sterling