Share ISAs For The Penniless

Saving for the very long term usually means investing in the stock market. But what if you can only spare a few quid a month?

People who don't regularly save for their long term futures usually say that it's because they have absolutely nothing to spare each month. In theory, that's an incontrovertible argument but, unless I know someone is genuinely living on a hand-to-mouth basis, I would always suggest that most can afford to save something - even if it's only a tenner a month.

What's a tenner a month? A couple of Starbucks coffees and a sandwich? A CD? A takeaway? Exactly!

However, the problem is that to invest for the long term usually requires putting money into the stock market and investment companies normally refuse to handle comparatively small amounts of money. But there are a few that will take your money regardless of how much you have to spare!

The Motley Fool is very fond of the cheap and cheerful index tracker because trackers just get on with doing their job of automatically following the overall market. (Well, computers don't generally need a new Porsche Boxster each year and they don't demand obscene Christmas bonuses either!) Best of all is that they don't have huge initial or annual management charges and you don't have to do much in the way of research.

We also like people to take advantage of salting their money away in ISAs because they are so tax efficient, which is why for people who want a simple investment vehicle we generally advocate an index-tracking ISA. So, if you've got less than £50 a month to invest, where should you look?

According to independent research data from Moneyfacts, there are only five index-tracking ISAs on the market that match the criteria of no initial charges or exit fees, cheap annual management costs and which invite investment of less than £50 a month.

Index-tracking share ISAs with low minimum monthly contributions and no initial charges

Company	Min Monthly Contribution	Annual Mgt Charge	Initial Charge
Direct Line FTSE 100 Tracker	£30	1%	Nil
M&G Index Tracker	£10	0.3%	Nil
Marks & Spencer UK 100	£25	1%	Nil
Nationwide Tracker	£20	1%	Nil
Virgin UK Index Tracking Trust	£1	1%	Nil

Source: Moneyfacts

As you can see, Virgin requires investment of as little as £1 a month although M & G clearly has the lowest annual management charges. What the table does tell you is that it is perfectly possible to invest comparatively small amounts of money for the future. We all have to start somewhere after all!

Finally, for those who can afford to invest £50 a month or more, Legal & General, Halifax and Fidelity's Moneybuilder all offer index-tracking ISAs with reasonable annual management fees.

Find out more about Index-Tracking ISAs.