How to turn £25 into £11,335 by investing in everyday supermarket
BOOST IT How to turn £25 into £11,335 by investing in everyday supermarket
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YOU could turn £25 a month into £11,335 over £20 by investing in an everyday supermarket.
In a new series, we shine a spotlight on a stock market share to explain how much a £25 investment could make you. This week, we ask experts about Tesco.
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Investing is a great way of turbo charging your savings - but how does it work? We explain
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It serves millions of customers every week, including its 23 million Clubcard members in the UK.
Before you start investing you should always have cash savings and remember, your investment could go down as well as up.
Experts say you need three to six months' worth of wages in a savings account before you can begin.
So should you consider investing in the grocery giant, and how do you do it? We explain.
How you can turn £25 into £11,335
The one big draw of investing in supermarkets is that while families may be cutting back due to a cost of living crisis, the fridge always needs to be filled.
Tesco is the UK's biggest supermarket, and its turnover for 2024/25 financial year was a huge £69.9 billion, up from £68.1 billion the previous year.
Although it faces fierce competition from German discounters, Tesco has managed to fight off its rivals to remain an attractive investment, according to analysts.
Susannah Streeter from the investment platform Hargreaves Lansdown said: "Tesco has huge scale and deep-rooted relationships with suppliers, which helps it keep prices lower putting it in a resilient position despite ongoing competition from value chains Lidl and Aldi.
"The grocery giant believes its in a safe place helped by its price match scheme and popular Clubcard which helps keep customers loyal.
"Tesco's strategy relies on offering better all-around pricing than the competition, and it has delivered remarkably well."
It's share price has jumped by 53% over the last five years, and 51% over the past 10 years.
Meanwhile, Ocado Groups' share price has dropped 84% over the past five years. But Sainsbury's share price has increased by 57 per cent over the same time period.
According to trading platform IG, if you started investing £25 a month into Tesco 10 years ago, your pot would now be £5,550 based on the 10 year annual return rate.
If you keep investing £25 a month into Tesco for the next 10 years, you could see your pot grow to as much as £11,335. That's based on an average return of 7.5% - which is Tesco's average return over 25 years is.
These figures also include the money you could get from being paid dividends too.
Dividends is a slice of a company's profits that is paid out to investors as a sort of reward - and incentive - for investing.
Companies don't have to pay out dividends, but Tesco does. Dividends are especially great for those who are retired who want a regular income.
Chris Beauchamp from IG said: "As the biggest supermarket in the UK Tesco continues to provide a compelling story for any investor."
Laith Khalaf from the investment platform AJ Bell said: "Tesco is the UK's biggest supermarket, and as such it has an air of solidity as an investment.
"It's never going to shoot the lights out, but it equally, people will always need to buy its wares."
Be aware that you can make your money grow faster elsewhere.
If you invested £25 into the FTSE 100, which is the collective name for the 100 largest UK companies by value, you could turn £25 into £4,465 after 10 years, assuming that your investment grew at a rate of 5 per cent a year after charges.
Want to know which other companies are worth investing in - and which ones to avoid? Read our Sun Club story on share price tips and how to grow your savings from £25 to £12,609.
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Here's how well Tesco's share price has performed over 10 years
What you need to know before investing
Before you start investing, you need to know the risks.
The return you make will depend on how much you invest and where.
As we have seen recently, the stock market can dramatically fall.
The American stock market saw its biggest drop since the start of the Covid pandemic after US President Donald Trump announced plans to introduce punitive tariffs on goods imported to the US from other countries.
The UK's own stock market, the FTSE 100, fell by more than 10 per cent after the news.
You must be prepared to lose it all - so only invest money you can afford to lose.
You need to be willing to invest cash for at least five years to mitigate any dips and allow your money to recover. If you can't afford to lock up your money for this long, investing may not be right for you.
It's usually better to drip feed money into your investments instead of putting down a big chunk of money in one go so you can ride the ups and downs of the stock market more smoothly.
How to invest
New investors often choose a ready-made fund, which is where an expert does the hard work and chooses a mix of assets to invest in, including company shares, bonds, property and gold.
But if you want to pick and choose your own investments, start by opening a stocks and shares ISA.
You can invest up to £20,000 a year into these accounts, and any gains you make are tax-free.
Gains are essentially the difference between what you paid for an asset, and what it's worth now.
Stocks and shares ISAs are different to cash ISAs, where you money is kept in cash and you earn tax-free interest on your pot.
If you're picking your own companies instead of choosing a ready-made fund, then it's crucial to do your homework.
Look at sites like Investegate to read how well the company is performing before putting any of your money in.
You can start investing with as little as £1.
The earlier you start investing, the longer you have to make your money work harder for you.
Read reviews and check the fees you will be charged before selecting an app.
Fees can soon rack up. For example, NatWest charges a fee of 0.55% of the value of your investment.
That works out at 55p for every £100 of your investments.
In comparison, Barclays charges a 0.25% fee, which works out at 25p for every £100 you invest.
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