Finding extra money to put into a brokerage account and invest can be really challenging -- especially if you have pressing expenses to take care of today.
It may seem really intimidating to try to transfer a ton of money out of your checking account to a brokerage firm to buy stocks. But what if you don't have to invest a fortune? If you invest just $100 a month, will that contribution really make a big difference in your net worth in the end?
How $100 a month can help make you wealthy
Investing just $100 a month can actually do a whole lot to help you grow rich over time. In fact, the table below shows how much your $100 monthly investment could turn into over time, assuming you earn a 10% average annual return.
| If you invest $100 a month for this many years... | ...this is how much you'll end up with. |
|---|
| 5 | $8,058.73 |
| 10 | $21,037.40 |
| 15 | $41,939.68 |
| 20 | $75,603.00 |
| 25 | $129,818.12 |
| 30 | $217,132.11 |
Data source: Author's calculations
That's a substantial amount of money to end up with, especially given that the median 401(k) balance for individuals ages 65 or over is just $87,725. You could end up with well over double what the typical American has saved for retirement, just from your $100 a month investment alone.
How investing $100 a month helps your wealth grow
A $100 monthly investment doesn't seem like a lot, but when you put this money into the market, it earns returns. If you earn 10%, in a year, your $100 initial investment would be worth $110.00. Next year, you would earn 10% not on $100, but instead on $110, so you'd end up with $121.00. This happens with each investment that you make and with each year that passes, and it has a snowball effect.
The more you're able to invest and the more time you have for compound growth to work, the more powerful the impact is. But even if you don't have more than $100 a month to invest right now, you're better off getting the money into the stock market and getting it working for you so your snowball can start to build.
If you're not sure where to come up with an extra $100 a month, some possible options for you could include:
- Do a few hours of overtime or extra work. If you can earn $15 an hour, you'd only need to work for about seven hours during the course of the entire month to make $100 extra to invest. Many people can find seven hours.
- Go through your budget carefully. You can probably find one or more expenses to cut that add up to $100. Switching to a cheaper cellphone plan, canceling a streaming service you don't use much, and giving up one meal out would probably get you there.
Over time, if you can increase the amount you invest, that would be ideal as you can build even more wealth. But you don't have to worry about that when you're just getting started. Just begin with that first $100. As you see how your money grows, you may get excited about investing and find new ways to increase your contributions -- and thus the power of compound growth in your wealth-building efforts.
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FAQs
Investing just $100 a month over a period of years can be a lucrative strategy to grow your wealth over time. Doing so allows for the benefit of compounding returns, where gains build off of previous gains.
Is it worth investing $100 a month? ›
Investing $100 per month, with an average return rate of 10%, will yield $200,000 after 30 years. Due to compound interest, your investment will yield $535,000 after 40 years. These numbers can grow exponentially with an extra $100. If you make a monthly investment of $200, your 30-year yield will be close to $400,000.
How much will I have if I invest $100 a month for 20 years? ›
For simplicity's sake, assume that compounding takes place once a year. After 20 years, you will have paid 20 x 12 x $100 = $24,000 into the fund. However, the compounding return will more than double your investment.
How much do I need to invest to make $1000 a month? ›
A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.
What happens when you save $100 dollars a month? ›
If you save $100 monthly for an entire year, you'll have $1,200 in the bank. But if you keep your savings in a savings account, you'll also earn interest. After one year of keeping $1,200 in a high-yield savings account with a 4.5% APY, you'll earn $54 in interest.
What happens if you invest $100 a month for 40 years? ›
According to Ramsey's tweet, investing $100 per month for 40 years gives you an account value of $1,176,000. Ramsey's assumptions include a 12% annual rate of return, which some critics have labeled as optimistic given that the long-term average annual return of the S&P 500 index is closer to 10%.
How much should I invest a month to become a millionaire? ›
Assuming that you can earn this 10% average return over your investing career, if you are getting started investing this year and you want to become a millionaire in 30 years, you would need to invest $506.60 per month. This amount may seem like a lot, but it may actually be pretty doable for many people.
What if I invested $1000 in S&P 500 10 years ago? ›
Over the past decade, you would have done even better, as the S&P 500 posted an average annual return of a whopping 12.68%. Here's how much your account balance would be now if you were invested over the past 10 years: $1,000 would grow to $3,300. $5,000 would grow to $16,498.
How much do I need to invest a month to be a millionaire in 5 years? ›
Suppose you're starting from scratch and have no savings. You'd need to invest around $13,000 per month to save a million dollars in five years, assuming a 7% annual rate of return and 3% inflation rate. For a rate of return of 5%, you'd need to save around $14,700 per month.
What will 100k be worth in 30 years? ›
Answer and Explanation: The amount of $100,000 will grow to $432,194.24 after 30 years at a 5% annual return. The amount of $100,000 will grow to $1,006,265.69 after 30 years at an 8% annual return.
Invest in Dividend Stocks
One of the easiest passive income strategies is dividend investing. By purchasing stocks that pay regular dividends, you can earn $2,500 per month in dividend income. Here's a realistic example: Invest $300,000 into a diversified portfolio of dividend stocks.
How much do I need to invest to make $500 a month? ›
Some experts recommend withdrawing 4% each year from your retirement accounts. To generate $500 a month, you might need to build your investments to $150,000. Taking out 4% each year would amount to $6,000, which comes to $500 a month.
How much money do I need to generate $2000 a month? ›
Earning $2,000 in monthly passive income sounds unbelievable but is achievable through dividend investing. However, the investment amount required to produce the desired income is considerable. To make $2,000 in dividend income, the investment amount and rate of return must be $400,000 and 6%, respectively.
How much will I make if I invest $100 a month? ›
A $100 monthly investment doesn't seem like a lot, but when you put this money into the market, it earns returns. If you earn 10%, in a year, your $100 initial investment would be worth $110.00. Next year, you would earn 10% not on $100, but instead on $110, so you'd end up with $121.00.
What if I invested $100 a month in S&P 500? ›
It's extremely unlikely you'll earn 10% returns every single year, but the annual highs and lows have historically averaged out to roughly 10% per year over several decades. Over a lifetime, it's possible to earn over half a million dollars with just $100 per month.
How to invest $100 dollars for quick return? ›
What Are Your Options When Investing $100?
- Start a Side Hustle. ...
- Enroll in a Course or Certification. ...
- Real Estate. ...
- Fractional Shares. ...
- Open a Savings Account. ...
- Invest in Bonds. ...
- P2P Lending Sites. ...
- Stocks/Mutual Funds.
Experts suggest investing 15% of your income each month, and more if you can afford to. However, if 15% is out of your budget right now, you should still invest what you can afford. Look to reduce your expenses to free up more money and invest more when it's feasible.
How much will I have if I save $100 a month for 10 years? ›
Year 10: Saving £100 a month for ten years would result in a total savings of around £12,398.
