Investing money is a great way to grow wealth. The problem, though, is that if you don't have money you aren't spending on bills, then you can't get started. If you currently bring home $3,000 a month, but every single dollar of that $3,000 is earmarked for expenses, then investing isn't going to happen for you.
But what if you were to tweak your spending ever so slightly so as to free up $50 a month? You might assume that a sum that small won't really do you much good. But actually, you may be surprised at how much wealth you can accumulate over time if you commit to investing $50 a month for a 40-year period.
Small contributions can go a long way
Whether you're investing in a taxable brokerage account or an individual retirement account (IRA) for retirement, time is really your greatest asset. Sure, it helps to invest as much money as you can. But if you give yourself a lengthy window of time to invest, you might do quite well for yourself even if you're not investing so much money on a monthly basis.
So, let's say $50 a month is all you can swing in your brokerage account or IRA not just at present, but over time. The stock market has, over the past 50 years, delivered an average return of 10%, as measured by the performance of the S&P 500 index. So, let's say you load up on stocks and manage to generate that same return. If you invest $50 over 40 years at 10%, you'll end up with around $265,000.
That's certainly a nice amount of money. In fact, a recent study by Northwestern Mutual found that the average American has $89,300 saved for retirement. In our example, investing $50 a month over 40 years leaves you with about three times that amount.
It's also worth noting that investing $50 a month means parting with $600 a year. Over 40 years, that's $24,000. So based on the number above, you'd be looking at a $241,000 gain.
Ways to carve out $50 a month
At this point, you may be motivated to invest $50 a month, but you may be unsure as to how you're going to find the money. Your first step there should be to do a deep dive into your spending and see exactly where your money goes month after month. Canceling one streaming service and skipping one takeout meal a month (not per week!) could free up $50, depending on what those things cost you.
Another option, of course, is to try to boost your income with a side hustle. Going that route might actually give you well more than $50 to invest with on a monthly basis. But if you don't want to commit to a lot of side work, you may be able to do something like drive for a ride-hailing service a few hours a week to come up with the cash.
You might assume that to amass a nice amount of wealth, you need to invest a ton of money. But clearly, a $50 monthly commitment could do a lot of great things for your finances. And if you're able to invest beyond that point, even better.
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FAQs
The stock market has, over the past 50 years, delivered an average return of 10%, as measured by the performance of the S&P 500 index. So, let's say you load up on stocks and manage to generate that same return. If you invest $50 over 40 years at 10%, you'll end up with around $265,000.
How much will I have if I invest $100 a month for 40 years? ›
The numbers may surprise you -- in a good way
In fact, if you invest $100 a month over 40 years, you could end up with a portfolio worth $531,000. However, that number hinges on a very big assumption, and it's that your portfolio is generating an average yearly 10% return.
How much will I have if I invest $50 a month? ›
With a good interest rate, say around 7% a year, your $50 a month turns into a lot more than just the $24,000 you put in. By the end of 40 years, you could end up with over $120,000. This shows how saving a little bit regularly can really grow into a big amount over the years.
How much is $50 a month for a year? ›
$50 monthly is how much per year? If you make $50 per month, your Yearly salary would be $600.
How much is $50 a week for 20 years? ›
Long-term investments, like stocks, have more potential to grow your money. Power of compounding: Over years, your regular $50 can grow significantly. For instance, in 20 years at a 7% return rate, it could become over $97,000.
How much will I have if I invest $1000 a month for 30 years? ›
As a rule of thumb, the sooner you start saving for retirement the better. If you start by contributing $1,000 a month to a retirement account at age 30 or younger, your savings could be worth more than $1 million by the time you retire.
How much do I need to invest to make $1 million in 10 years? ›
In order to hit your goal of $1 million in 10 years, SmartAsset's savings calculator estimates that you would need to save around $7,900 per month. This is if you're just putting your money into a high-yield savings account with an average annual percentage yield (APY) of 1.10%.
How much money do I need to invest to make $4000 a month? ›
Making $4,000 a month based on your investments alone is not a small feat. For example, if you have an investment or combination of investments with a 9.5% yield, you would have to invest $500,000 or more potentially. This is a high amount, but could almost guarantee you a $4,000 monthly dividend income.
How much money do I need to invest to make $1 000 a month? ›
Buy US Treasuries
Treasury bills (T-bills) are short-term debt instruments that are paying out around 4.75% APY, giving you a guaranteed rate of return that is backed by the U.S. government. To make $1,000 per month on T-bills, you would need to invest $240,000 at a 5% rate.
How to turn 10k into 20k? ›
How Can I Turn 10k Into More Money?
- Investing in real estate with companies like RealtyMogul or Fundrise.
- Investing in stocks and ETFs.
- Starting an online business or side hustle.
- Investing in cryptocurrency.
Investing only $50 a month adds up
Contributing $50 a month to an investment account can help create impressive savings, even at a moderate 5% annual growth. It's a common myth that you need a few thousand dollars to begin investing.
What if I save $300 a month for 5 years? ›
What if you started working with an investment pro today and found ways to add an extra $300 per month into your retirement accounts? If you did that for just five years, you could add over $368,000 to your nest egg in 30 years.
How much is $100 a month for 25 years? ›
Using SmartAsset's investment calculator, let's say you're investing $100 per month with retirement in mind. You plan to invest $100 per month for 25 years and expect a 10% return. In this case, you would contribute $30,000 over your investment timeline. At the end of the term, your portfolio would be worth $133,889.
What if I invest $50 a week for 30 years? ›
Chart by author. Assuming a 15% annual growth rate (on average), a $50 per-week investment could grow to a value of more than $1.5 million after 30 years.
How much is $25 dollars a week for 40 years? ›
Every dollar you spend on something you don't need is one less dollar that can make money for you. Here's a reality check: If instead of spending an extra $25 a week you save and invest it for 40 years, you will end up with $277,693.
How much is 20 dollars a week for 40 years? ›
But let's be conservative and say you aren't. Instead, let's say you're able to generate a 7% return. Even so, if you were to invest $20 a week in your IRA over a 40-year period at 7%, you'd end up with a balance of around $206,000. That's not exactly a negligible amount of money.
How much will $100 a month be worth in 30 years? ›
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 is $500 a month invested for 30 years? ›
What happens when you invest $500 a month
| Rate of return | 10 years | 30 years |
|---|
| 4% | $72,000 | $336,500 |
| 6% | $79,000 | $474,300 |
| 8% | $86,900 | $679,700 |
| 10% | $95,600 | $987,000 |
Nov 15, 2023
Investing $1,000 a month for 20 years would leave you with around $687,306. The specific amount you end up with depends on your returns -- the S&P 500 has averaged 10% returns over the last 50 years. The more you invest (and the earlier), the more you can take advantage of compound growth.
How much 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.
