Start investing with £100 a month

Read the first part of our three-part series: Five-minute guide to starting a portfolio

So you've moved up a level and you're thinking of getting into the investment game with £100 a month. With that kind of money you can split your interests between two or even three funds – and the choices are huge.

Last month we looked at how to help new investors dip their toes into the stockmarket waters with a minimal monthly contribution; this time we invite you to up the stakes – and give you some ideas to suit your needs.


Investor One, a 30-year-old entrepreneur, proudly describes himself as a risk-taker. He's certainly not interested in settling down yet, so has no dependents to worry about.

However, he does appreciate the need for longer-term planning and wants to maximise the level of return on his investments, while being fully aware of the risks this may involve.

His dream is to amass enough money through his business ventures and investing to enable him to contemplate retirement at 50.

What he needs to think about...

He is in a fortunate position, with a terrific opportunity to put solid foundations in place for his financial future, while enjoying his cash at the same time. Money may be rolling in at the moment, but the unpredictable nature of his business makes it essential that he puts at least some of it aside.

With the very long term in view, he should consider starting a pension – if he hasn't done so already – and keeping the rest of his spare cash well diversified.

Given his age and timescale, he has a greater capacity to take investment risk, which means putting a relatively high percentage of his investment in overseas and emerging market equity investments.

These areas have the potential to grow more over the long term, although as the performance figures above show, it will be a bumpy ride and he needs to be prepared that the value of his investments could fall in the short term.

Moneywise recommends...

Fund: JPMorgan Emerging Market Investment Trust

Managers: Austin Forey and Richard Titherington
Amount to invest: £50 a month
Value of £100 invested three years ago: £133 (sector average £125)

Fund: Scottish Investment Trust
Manager: John Kennedy
Amount to invest: £50 a month
Value of £100 invested three years ago: £93 (sector average £102)


Investor Two, a 50-year-old divorcee, is caught in two minds. While he's aware of the need to top up his income in retirement, he remains sceptical about pinning all his hopes on the pensions market, and is certainly not prepared to lose his shirt on the stockmarket.

Yet with two young children for whom he pays maintenance, he acknowledges the importance of ensuring his investments not only earn enough to guarantee his own future standard of living but also enable him to set aside money for his family.

What he needs to think about...

It is clear that Investor Two is a man with many demands on his money. Having part exposure to emerging markets is likely to be a sensible option, given his long-term requirements and the fact that time is still on his side with around 15 years to go before he retires.

However, a more stable fixed interest investment is also wise, as he is not prepared to leave all his savings to the vagaries of the stockmarket.

Although emerging markets can be volatile due to the nature of the countries and markets in which they invest, he can limit the potential risks by opting for a well-diversified emerging market fund that won't be too badly hit should one country go through a rough patch.

The rewards for investing in this area can be huge. The average fund in the IMA Global Emerging Markets sector has delivered 176.8% return over the past decade, according to Morningstar (figures to 20 September 2010). The average fund in the supposedly safer IMA UK All Companies sector, was up just 24.9% over the same period.

Moneywise recommends...

Fund: Jupiter Global managed fund
Manager: John Chatfeild-Roberts
Amount to invest: £70 a month
Value of £100 invested three years ago: £99.90 (sector average £97.40)

Fund: M&G Corporate Bond Fund
Manager: Richard Woolnough
Amount to invest: £30 a month
Value of £100 invested three years ago: £133.10 (sector average £114.30)


Investor Three, a 60-year-old widow, is frustrated. While she's  naturally a cautious investor, the rock-bottom interest rates on offer from most high-street savings accounts mean she will need to look elsewhere if she wants to generate enough to supplement her pension and save towards eventually helping her young grandchildren through university.

Ideally, she is after a low-maintenance way to produce both income and capital, with the comfort of knowing she will not lose everything if markets go against her.

What she needs to think about...

These are difficult times to plan ahead, and the uncertainty surrounding global equity markets means that Investor Three shouldn't take unnecessary risks. With an investment time horizon of around 15 years, she will probably be best served by a 50:50 split between equities and bonds. 

She already has a pension in place to meet most of her needs in retirement, plus a modest rainy-day fund to draw on if she suddenly faces an unexpected bill, so the extra income and growth from her investments will give her the flexibility to help out her family.

Separately, it would also be worth her taking advice on the best ways to structure her investments and plan her estate in light of current inheritance tax rules.

For example, up to £3,000 a year can be given away as gifts and will be exempt from IHT. Grandparents can also give cash or gifts worth up to £2,500 without risk of tax for weddings or civil partnerships.

Moneywise recommends...

Fund: Invesco Perpetual High Income
Manager: Neil Woodford
Amount to invest: £50 a month
Value of £100 invested three years ago:
£96.58 (sector average £91.33)

Fund: Investec Monthly High Income Accumulation units
Manager: Kieran Roane
Amount to invest: £50 a month
Value of £100 invested three years ago:
£122 (sector average £118.30)

Our fund recommendations come from investment guru Dennis Hall, founder of Yellowtail Financial Planning. The former Royal Marine has won a number of industry awards and has appeared on radio and TV, principally BBC and Sky. Performance figures as at 5 October 2010

More about

Your Comments

I am very surprised that your invesment guru has reccomended invesco
high income i would say over the last 5 years the return has been so poor
i have now closed this account beacuse of such poor returns theremust be
other trusts out there that are better and suggest people look for them.

A lesser

Hi if i wanted an investment in stock and shares ,how does a passivley managed account compare with a managed account ,ie tracker ? and how do they work ?

I too like your investor are with Investec High 5 acciunt and invested £25,000 about 2 - 3 years ago. recently about 3 months ago my IFA said he had issue with Investec but last week I emailed him but he has not given me the reason and not suggested I move my money. What do you think?

I have smaller amounts with Invesco perpetual, Jupiter, Newton and very recently he moved my 'toe in the water' £1000, from India sub continent to Artemis. I am 78 yrs always careful, I know if I lost my investments it would be serioous for me as they suppliment my pensin. I am a widower. How do I know by changing my IFA I would have one I can trust,

I could possibly invest £100 a month into a good fund.

Eileen M Thrush

I also have Invesco Perpetual high Income, and had it for years. What does it mean £100 invested 3 years ago now £96.58 is that interest or dropped in value. Its not obvious to me. I have £11.109.16,

Appreciate your annswer.

Eileen Thrush

That is some great advice!

Investor one definitely shouldn't wait to become a great with security analysis because of the effect that compound interest has... If you started with £100 a month at the age of 20 to the age of 50 at 8% would end up becoming roughly £150,000 - but if you were to wait 5 years and start at 25 you would end up having about £95,000 - £55,000 less! Start early!!!