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
On average, the stock market yields between an 8% to 12% annual return. 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.
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.
How much will I have if I invest $100 a month for 5 years? ›
How $100 a month can help make you wealthy
| 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 |
2 more rowsOct 1, 2023
(Enter "$100" in the "Contribution amount" field, then select "Monthly" for the "Contribution frequency" option.) You would end up with $32,023.26 after 10 years, compounded daily (assuming 365 days a year). The interest would be $10,023.26 on total deposits of $22,000.
Is saving $100 a month good? ›
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 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.
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 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.
Can I become a millionaire in 5 years by investing? ›
Let's say you want to become a millionaire in five years. If you're starting from scratch, online millionaire calculators (which return a variety of results given the same inputs) estimate that you'll need to save anywhere from $13,000 to $15,500 a month and invest it wisely enough to earn an average of 10% a year.
How much do I need to invest to make $1 million in 5 years? ›
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.
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.
What will $10 000 be worth in 30 years? ›
Today's savings account rates aren't the norm, so let's assume that keeping your $10,000 in cash results in an average annual 2% return over 30 years. In that case, you're growing your $10,000 into about $18,000.
Can I retire at 70 with 300k? ›
$300,000 can last for roughly 26 years if your average monthly spend is around $1,600. Social Security benefits help bolster your retirement income and make retiring on $300k even more accessible. It's often recommended to have 10-12 times your current income in savings by the time you retire.
What 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 is a realistic amount to save per month? ›
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.
How much is $100 a month for 20 years? ›
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 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 will I make if I invest $1,000 a month? ›
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.
What is $100 a month for 18 years? ›
This chart shows that a monthly contribution of $100 will compound more if you start saving earlier, giving the money more time to grow. 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.
