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
You could end up with more than $500,000 to your name by investing $100 a month over four decades. The extent to which your money grows will hinge on the investments you choose. The more time you give your money to grow, the better your long-term financial picture is apt to be.
What happens if you invest $100 a month? ›
You could end up with more than $500,000 to your name by investing $100 a month over four decades. The extent to which your money grows will hinge on the investments you choose. The more time you give your money to grow, the better your long-term financial picture is apt to be.
Is it good to save $100 a month? ›
Your Retirement Savings If You Save $100 a Month in a 401(k)
If you're age 25 and have 40 years to save until retirement, depositing $100 a month into a savings account earning the current average U.S. interest rate of 0.42% APY would get you to just $52,367 in retirement savings — not great.
How much will I get if I save $100 a month for 18 years? ›
If you save $100 a month for 18 years, your ending balance could be $35,400. If you save $100 a month for 9 years, your ending balance could be about $13,900.
How much is $100 a month invested from 25 to 65? ›
$1,176,000. You do NOT have to retire broke.
How much is $100 a month for 5 years? ›
How to build wealth with $100? ›
Below are some common methods, but keep in mind that they vary in the time it takes to grow your wealth as well as in risk level.
- Opening a high-yield savings account. ...
- Investing in stocks, bonds, crypto, and real estate. ...
- Online selling. ...
- Blogging or vlogging. ...
- Opening a Roth IRA. ...
- Freelancing and other side hustles.
At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.
Is investing $50 a month worth it? ›
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.
How much money should I be investing each month? ›
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.
Rather than hitting it big with speculative investments, the real key is consistent investment from as early an age as possible. If you do that, investing just $100 per month may be enough to get you to a seven-digit retirement account.
Is $100 a month good for an IRA? ›
If you're focused on long-term growth, investing $100 each month could be a good move for you. Many people invest through an IRA account. Check out our list of the best IRA accounts to learn more about how these investment accounts function.
Is 100K savings at 30 good? ›
“By the time you're 40, you should have three times your annual salary saved. Based on the median income for Americans in this age bracket, $100K between 25-30 years old is pretty good; but you would need to increase your savings to reach your age 40 benchmark.”
How much will I earn if I invest $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.
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 much do I need to invest a month to become a millionaire in 10 years? ›
Now, let's consider how our calculations change if the time horizon is 10 years. If you are starting from scratch, you will need to invest about $4,757 at the end of every month for 10 years. Suppose you already have $100,000. Then you will only need $3,390 at the end of every month to become a millionaire in 10 years.
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.
How much money 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 invest to make $3,000 a month? ›
Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.
