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Is your inner 5 year old damaging your future?

How a little self-restraint can go a long way to improving your wealth.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

50 years ago, Stanford University psychologist Walter Mischel ran a series of studies called ‘the Stanford marshmallow experiment’.

The test was quite simple. A group of children were offered one small treat, often a marshmallow, and given a choice. Take one immediately, or get two if they waited fifteen minutes.

Some tried covering their eyes with their hands and some tried turning around altogether. But you won’t be surprised to hear only around 30% of them got two marshmallows.

Why is it important? Researchers discovered that the children who could delay gratification and wait for a bigger reward, tended to have better outcomes in life including higher academic scores and improved social competence.

The ability to save money, rather than spend it, is a marshmallow test for investors.

By saving now and investing for the long term, you’re holding out for a potentially bigger reward later down the line.

Please remember that all investments can fall and rise in value, so you could get back less than you invest. This article is not personal advice. If you’re unsure if an investment is right for you, seek advice.

Be one of the 30%

If you’re struggling to save a lump sum to invest, don’t worry. Try investing little and often to build up your money.

You can set up a monthly Direct Debit and get started with as little as £25 a month. And you can choose exactly where the money will be invested.

You'll soon get used to the money leaving your bank account, just like your phone or utility bills. It'll become part of your monthly spending.

And over time, you could build a significant pot.

£50 invested each month for the last 25 years in the UK stock market would now be worth over £37,000. Though past performance is not a guide to the future and you could get back less than you invest.

£50 invested monthly in the UK stock market over the last 25 years

Past performance isn’t a guide to the future. Source: Lipper, as at 31 October 2019

How to set up a monthly investment

It's easy to start investing monthly in your HL account. Simply click on the ‘Monthly Savings’ tab in your online account.

There are no dealing charges for funds, and a dealing commission of just £1.50 per trade for shares, ETFs and investment trusts if investing monthly.

More on our charges

New to HL?

You can set up a Direct Debit when you open an HL account.

You can decide where your money will be invested at the same time or decide at a later date. You can hold the contributions in your account as cash until you pick your investments.

Choose the right account

Set up Monthly savings in minutes

You'll just need your bank details to hand. All you need to do is:

Log in to your account

Select the account into which you want to invest monthly

Choose the 'Monthly savings' tab and follow the instructions

Log in now

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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