How Much Can $100 Per Month Really Grow To Be
Here’s where most articles will take the average return of the stock market — between 9% and 10% per year — and simply use that to show you how your money will make a straight line up over time.
While that’s good for illustrative purposes, I’d like to show you exactly how your money would have grown over a real period of time.
Let’s say that in January 1970 you started putting away an inflation-adjusted equivalent of $100 per month. We make it “inflation-adjusted” because $100 back then was a lot of money — equivalent to $660 today — and you invested that lump sum in the broader stock market . Here’s how that sum would have grown over time.
Chart by author. Assumes inflation-adjusted contributions and includes dividends reinvested
To put the importance of time in perspective, here’s how much would be sitting in your nest egg if you started investing $100 — adjusted for inflation — over different time frames.
|If you started investing $100…||Then your nest egg would have…|
|45 years ago|
Data source: Author’s calculations. Nest egg values rounded to nearest $100.
Of course, saving and investing more than $100 would be nice — but this isn’t chump change either! Following the 4% safe withdrawal rule, a nest egg of $180,000 could provide $7,200 in annual income. When combined with Social Security, any pensions or other retirement plans, and part-time work, this could provide enough for you to call it quits on your day job.
What Would Happen If You Invested $100 A Month In The Stock Market
- Dave Kovaleski, The Motley Fool,
Most people spend $100 per month for cable TV or streaming services, their cellphone service, gas, coffee to go, or any number of things without thinking about it. Some people even spend money on subscriptions they’ve forgotten they had. I recently realized I was paying way too much for an audiobook service that I hadnt used for a year!
While many of these expenses bring great joy to your life, there are some you could certainly cut out. What if, for example, you saved that $5 per day on coffee and a bagel and invested it in something that will likely grow your money, like the stock market?
Lets take a look at how you could turn $100 per month into $100,000.
Playing It Safe: Where To Invest $100 Conventionally
Slow and steady wins the race if security is important to you, youll be glad to know that its often possible to invest small amounts in much the same way as larger sums. The returns you can expect are normally on the low side, but at least you shouldnt have to walk away with less than you put in.
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Investing In The Stock Market
Its smart to check out the fine print when investing with small dollar amounts. Brokers who charge high fees can eat up the profits of beginner investors real fast.
However, when done right, beginner investors who start investing with smaller dollar amounts can grow some serious wealth.
You can build wealth through the stock market by purchasing stock funds, index funds, etc. during the open trading times.
Education is key before you start socking money into the market. Luckily, the Internet is filled with great articles explaining the ins and outs of stock market investing. You be cautious though and only do your research using credible investment websites.
Also, there are great books on investing by experts such as John C. Bogle and Warren Buffett. Read books and articles by investing experts. This way you can begin to understand how to make money through the stock market.
Beware of get-rich-quick schemes and other promoted methods that promise big profits overnight. Smart stock market investing involves a slow and steady wins the race mentality.
And it also involves sticking with your investment through the ups and downs of the market. In addition, beginner investors will want to choose a brokerage account that they can manage themselves online.
This is especially true if youre starting with a smaller amount of cash. These types of brokerages charge little or no fees. So this way you can be sure that as much of your money as possible is used for growing wealth.
Invest $1000 In A Mutual Fund
Investing your money in a mutual fund is a great hands-off way to grow your money.
A mutual fund is an investment vehicle where money is pooled from investors to invest in securities like stocks, bonds, and other assets.
Mutual funds are operated by professional money managers who often have advanced degrees in finance and economics. The manager, along with their team of analysts, allocate the fund’s assets to attempt to produce capital gains and or income for the fund’s investors.
This is one of the best ways to invest if you just want to grow your money without thinking about it.
Read Also: Ways To Invest Money Long Term
Select An Account Based On Your Goal
Now, it’s time to put your plan into action and start investing.Some investors are tempted to wait for the “right” moment to invest. But starting early, and investing what you can regularly, usually takes you a lot further than waiting.The type of account you choose depends on your goal. There are many types of investment accounts but here are some of the most common onesorganized by goal:
A brokerage account can help you save and invest for a broad range of goals.Schwab One® Brokerage Account Allows you to invest in everything from stocks and bonds to mutual funds, ETFs, and more.
Tax-advantaged accounts can help you invest for retirement needs.Traditional IRA
Tax-advantaged accounts can help you save and invest for educational expenses.529 College Savings Plan Learn more
Savings Account Or Money Market
Savings accounts and money market accounts are safe investments – they are typically insured by the FDIC and are held at a bank.
These accounts earn interest – so they are an investment. However, that interest is typically less than you’d earn investing over the same period of time.
However, you can’t lose money in a savings account or money market – so you have that going for you.
The best savings accounts earn upwards of 1.00% interest currently – which is the highest it’s been in years!
Check out our favorite savings account below:
Open A New Savings Account
This is why LendingClub is our favorite CD alternative.
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Turning $100 Into $100000
So, with this stable ETF designed to weather various market cycles, lets say you average a 10% return annually over the next 20 years. That would be pretty much in line with its historical performance going back to 2004. Also, the S& P 500 has returned about 10% annually since its inception in 1926.
If you took an initial $100 investment and added $100 per month for 20 years, you would have about $77,000. Now, say you invested $100 per month for 25 years — you would have approximately $134,000. Keep in mind, this hypothetical is based on past performance, which is no guarantee of future results. But it shows how steady, consistent investment, even just $100 per month, can grow exponentially with an average return and the power of compounding.
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Invest In A Stock Index Mutual Fund Or Exchange
Stocks are probably the most powerful wealth-building tool that the average person can buy. However, it can be really hard to pick the winners, and, if you’re only investing $100 at a time, it might not be worth the time and effort to choose individual stocks. This is where stock index funds come in.
When you invest in a stock index fund, you buy a piece of every company that’s held in that index. In other words, if you invest $100 in the SPDR S& P 500 ETF Trust , you’ll own a tiny portion of all 500-plus companies that are in the S& P 500 Index. You get instant diversification and an investment with a long history of making money for anyone who can hold for a decade or longer.
It’s also simple to do. You just put your money into a stock index mutual fund or a low-cost exchange-traded fund. You can choose from a wide variety of stock indexes, ranging from popular ones such as the S& P 500 Index to more specialized indexes.
There are some differences between ETFs and mutual funds, including how you buy and sell shares, what minimum investments apply, and what fees you can expect to pay. But the general idea behind both ETFs and mutual funds is that you can invest in the whole market or in selected parts of it through a single investment.
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Invest $1000 In Your Kid’s College Education
Every parent wants their student to live a successful life, and one path to success is through college.
But the fact is that college is expensive, and is showing no sign of slowing down.
Investing $1,000 now doesn’t seem significant, but it will create a path for future investments into your kids’ college fund.
The average cost for one year of college from 2015-2016 was $26,120, or $104,480 for four years! You could graduate with the same four-year degree in 1989 for $26,120.
So the average price for a four-year college degree increased by 2.6% annually throughout this period.
According to the Federal Reserve Bank of St Louis, wages only grew by 0.3% annually from 1989-2016. Meaning the average college tuition grew 8x faster than wages over the same period!
So, if you want your kids to go to college and you don’t have the money ready now, you should consider saving for their college education.
Flip Items For Profits
Flipping items for a profit is a classic way of turning a small amount of money into something more substantial.
The term flip or flipping just means buying something and then selling it at a higher price for a profit. You can flip houses, cars, clothes, electronics just about anything.
One of the best ways to flip items if you only have $100 is to go to thrift stores and garage sales. You can find high-priced items that are discounted as much as 95% at these places.
For example, when I was in college, I found a $200 Ralph Lauren jacket with tags at Goodwill for only $5. I could have sold this jacket at a 50% discount and still made amazing profits.
Gary Vaynerchuck has an entire series on YouTube dedicated to flipping items. He goes to garage sales, finds various collectibles and memorabilia that will have some value, and sells them on eBay for a profit.
Other than garage sales and thrift stores, here are some other places you can find cheap items to flip:
- Facebook Marketplace
You can also sell items on any of these apps and websites.
So, how do you start flipping items? First, you need to decide where you will find your cheap items. Ive already listed several examples.
If I were to start, I would first check thrift stores and clearance racks and big retailers like Walmart and Target.
Youll need a way to check prices while shopping so that you can confirm whether or not you can profit from your flip. For that, you can simply use the eBay app.
Take Someone You Look Up To Out To Lunch
Success in life often comes down to the connections we make and the relationships we build. Relationships dont happen by accident you get what you put in.
If there is someone you look up to, whether its a business person, real estate investor, church leader, a role-model parent, or anything in between, reach out to them. You dont need to try to get anything out of the lunch, per se. This is all about building a relationship. If you treat people well, good things tend to happen because of it.
Give Your Resume A Makeover
The biggest pay raises that people usually get dont come from internal promotions with the same company. Most of the time the biggest jumps in pay happen when you get a new job at a different employer.
Since your day job most likely has the biggest impact on your overall income, its important to get everything you can out of it, salary wise. If you are thinking about re-entering the job market, or even asking for a raise at your current employer, you need to have a top notch resume.
A well-done resume makeover can turn it from bland to brilliant. The contents of your resume are one thing, but the delivery and presentation are just as important for helping you stand out to a hiring manager. If you dont have an eye for design, sites like MyPerfectResume have dozens of expertly-designed templates. They even walk you through the process of building a resume step by step and provide suggestions that fit your work experience, all for fewer than $3.
Another option is to hire an expert to go over your resume with you and help you identify areas where you can improve. If a $100 investment here can lead to a new job that pays $5,000 more per year, that is a 50X return on your investment.
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Investment Options To Avoid
There are several companies out there that advertise getting started investing for just $5. We want to make sure that you have a “buyer beware” mindset when it comes to using these companies and you fully understand what you’re getting into.
For example, Stash Investing allows you to invest for as little as $5. However, they charge a $1 per month fee on accounts of less than $5,000. If you’re only investing $5 per month – and paying $1 in fees each month, your portfolio return is going to suffer money.
If you only invest $5 per month for a year, you’ll have committed $60. However, you’ll have paid $12 in fees – leaving you with $48. That’s 20% of your money being given up to fees.
Only in 32 of the last 100 years has the stock market returned over 20% in a given year . The average return has been roughly 11%.
That’s why you need to avoid services that charge you huge fees to invest. $1 per month might not seem huge, but it is as a percentage of your $100 investment. That’s why we love services like M1 Finance, which offer commission free trading with no annual fees.
Easy Ways To Invest $1000
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A lot of people underestimate how important investing is to wealth-building and I’m going to explain why.
I bet you’re asking yourself what can I invest $1,000 in? And is it worth only investing $1,000?
And what if you’re new to investing? Where do you start? Well, don’t worry. I’m going to answer all of those questions in this article.
Let’s dive into my guide on how to invest $1,000 and make your money grow.
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At What Age Should You Stop Investing
Since theres no magic age that dictates when its time to go from saver to spender , youll have to consider your own financial situation and lifestyle. .
Is 35 too old to start investing? Its never too late to start saving money that you will use in retirement. Even starting at 35 means you can have more than 30 years to save, and you can still benefit greatly from the combined effects of investing in a tax-protected retirement vehicle.
Know Your Risk Tolerance
Can you afford to lose $100? Suppose the price of DOGE should drop to extinction zones, will you be able to survive after the loss of your capital? Dogecoin is currently trading at $0.1569 but continues to experience sharp spikes and recessions in its daily trading volume.
If you assess your risk tolerance and realize the rewards outweigh the risks, then you can carry on and invest $100 in Dogecoin .
Do not follow feeds from social media and invest your life savings into crypto. As an e-learning organization, we continue to advise our clients about the need to invest an amount they can afford to lose.
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Know The Actual Costs Involved
Investing $100 of your hard-earned money in Dogecoin only to lose some of your capital to depositing and transaction fees is heartbreaking. Find exchanges that meet your preferences in terms of fees. Does the exchange allow free deposits and low transaction fees? Once you ask this question, you will be able to tailor your search into finding an exchange that will allow you to use your $100 to buy a package of Dogecoin .
Mutual Funds And Index Funds
Whether you have a little money or a lot of money, you can also invest in the stock market indirectly through mutual funds and index funds. Traditional mutual funds rely on human investment experts to pick stocks and other investments that they make using the money of people who have contributed to the funds. Some fund managers earn good reputations for their successful stock picking and they can then command higher fees from investors.
Index funds, on the other hand, invest in stocks based on some sort of formula. Many invest in all the stocks on a common financial index, like the S& P 500, the Dow Jones Industrial Average or the Nasdaq index. Some follow indexes geared toward particular sectors of the economy, such as energy, retail or real estate. They charge lower fees than traditional mutual funds, since they don’t need as much human intervention.
You can invest in mutual funds through the companies that operate them. Many index funds are exchange-traded funds, meaning that they carry ticker symbols similar to individual stocks and can be purchased by using that symbol with any broker. Some brokerages may also offer their own index funds.
However much money you have to invest, shop around for a fund with a share price in your price range that invests in something that you think has the potential to do well. Make sure you understand the fee structure and how it compares to other investments.