The £0 to £100,000 investment journey

Getting to your first £100,000 is no measly investment goal, but it’s absolutely achievable. Here, we’ll look at the steps you need to take and the traps to watch out for when building up your £100,000, and how long it might take.

The first £100,000 is the hardest

Ever heard the business saying that making the first million is always the hardest? For investing, it applies to the first £100,000 too. Once you get past these early markers, compound interest can do most of the work to build your wealth for you. But in those first stages of investing, a good portion of the gains will have to come from careful budgeting.

The good news is, the more your money grows, the smaller the proportion of your gains come from your pocket. For example, a £10,000 investment that returned 7% after fees each year would take 33 years to reach £100,000. But to get to £200,000, it would then only take another 10 years, and just six years to reach £300,000.

Of course, just plopping £10,000 into an investment account and waiting for it to grow isn’t likely to be the most effective or practical way to reach £100,000.

One of the most popular and accessible ways people invest is putting in a bit each month, either by direct debit or a lump sum, and then letting that money compound. But there’s a lot of variation that can happen here depending on how you invest, how tax-efficient your investments are, and what portion you can manage to squirrel away.

Investing efficiently

One of the easiest ways to slow down investment gains is having tax eat into your returns. Thankfully, there are tax-protected investment wrappers in the UK, ISAs, that mean when we begin investing, we can do so without worrying about capital gains or income tax. Assuming you are not investing this money through a pension, a Stocks and shares ISA is the most tax-efficient way to hold your investments. You can invest up to £20,000 in a Stocks and shares ISA each year but starting from 2027, the money in this ISA cannot be held in cash otherwise it will face a fee.

Using a Stocks and shares ISA can save you thousands and is no more difficult to set up than a standard investment account, making it an easy win on your investment journey.

Find out how Cash ISAs saved Brits billions last year in our recent article. 

How long until I reach my goal?

There are two major levers you need to pull in order to reach that £100,000 target: the amount you can invest, and what it’s invested in. In practice, these two factors will need to work together, but we’ll show how they influence investment value independently first.

The savings lever

How much you can afford to save each month is likely to be dictated by your salary but seeing what a bit more savings can get you is still a powerful tool.

Let’s look at three different scenarios: Sally, who can save £250 each month, John, who can save £500 each month, and Hillary, who can save £1,000 a month. We’ll assume they all get an annual return of 7% after investment fees. While Sally will need to keep up her £250 contributions for 18 years to reach £100,000, John will need 12 years and Hillary will need only seven.

The investment lever

The type of investment you choose will also have a big impact on the time it takes to reach your £100,000 goal. Higher-return investment options like stocks often mean taking on additional risk and more volatility. So, if you are looking to invest just for a few years before a house purchase for example, you might not opt for the most adventurous option, because there may not be time for your investment to recover from a market drop. But those who opt to be more cautious, such as investing through bonds, will find a much longer road ahead because the annual rates of return are likely to be much smaller, perhaps in the range of 2% to 5% depending on the bond type, than for stocks and shares. These different rates of return will make a big difference in the length of time it takes to reach £100,000.

Let’s take Sally, John and Hillary from above only this time, they’ll each invest £500 each month with different returns. Sally will have an annual return of 3% after fees, John will have 5%, and Hillary will have 7%.

The longer you stay invested, the more that a higher annual investment return will start to make a difference. While the difference is just a few years for the first £100,000, the gap will keep expanding as your pot to compound grows. Of course, this illustration assumes that investments grow by the exact same amount each year, which is extremely unlikely to happen when you are investing. But it can give a bit of a picture of what kind of return you’d like to aim for. You can use AJ Bell’s ISA calculator to play around with your own figures.

Starting with all-in-one funds

Those that have an idea of the risk level and return they are aiming for but would rather leave the choice of which exact funds and stocks to someone else, might opt instead for an all-in-one fund (or multi-asset fund). These funds invest in a basket of other investments to create a variety of risk and return levels, and span across bonds, stocks, and other assets. AJ Bell offers its own range, and there’s many others to choose from on the fund screener tool. While past returns don’t guarantee what will happen in the future, investors can look at how the funds have performed over the past five to ten years to understand where on the risk-reward spectrum they sit.