A little money can go a long way in the stock market.
Investing in the stock market is one of the most effective ways to generate long-term wealth, but it can be daunting -- especially if you're a beginner.
The good news, though, is that you don't need to be a stock market expert or have thousands of dollars per month to invest. In fact, with just $100 per month, you could potentially build a portfolio worth $325,000 or more. Here's exactly how to get there.
Choosing the right investments
Where you invest is far more important than how much you can afford to invest each month. If you're investing in shaky stocks, it doesn't matter how many thousands of dollars you're contributing -- you could still lose far more than you gain.
Image source: Getty Images.
If you're willing to put in some time and effort, investing in individual stocks could be a smart strategy. This approach requires a bit of research to ensure you're buying quality companies, but if done well, you're much more likely to earn above-average returns over time.
Individual stocks aren't the only way to invest, however. If you're looking for a more effortless option, broad-market ETFs -- such as an S&P 500 ETF -- can be a better fit. Each ETF contains dozens or even hundreds of stocks, providing instant diversification with next to no effort on your part.
S&P 500 ETFs, in particular, can be a good fit for risk-averse investors looking for a low-maintenance investment. This type of fund tracks the S&P 500 index itself, containing stocks from all 500 companies within the index. S&P 500 ETFs are among the lowest-risk funds, and you're all but guaranteed to see positive returns over the long haul.
Building a $325,000 portfolio
The returns you earn will depend largely on where you invest. Historically, though, the market itself has earned an average annual return of around 10% per year -- meaning the annual highs and lows have averaged out to around 10% per year over several decades.
For simplicity's sake, let's assume you're investing in an S&P 500 ETF, earning a 10% average annual return. If you're investing $100 per month, here's approximately how much you could accumulate over time, depending on how many years you have to save:
| Number of Years | Total Portfolio Value |
|---|
| 20 | $69,000 |
| 25 | $118,000 |
| 30 | $197,000 |
| 35 | $325,000 |
| 40 | $531,000 |
Data source: Investor.gov. Table by author.
To reach $325,000 in total savings, you'll need to invest consistently for around 35 years. But if you have even a few more years to invest, you could potentially earn far more.
Again, these numbers assume you're earning returns in line with the market's historic average. If your investments are beating the market even slightly, it's possible to earn much more over time.
For instance, say your investments are earning a 12% average annual return compared to 10% per year. If you're still investing $100 per month, you'd have a total of around $518,000 after 35 years, compared to $325,000 in that time period with a 10% return.
There are never any guarantees in the stock market, but with the right strategy, a little cash can go a long way. By choosing the right investments and getting started as soon as possible, you could build a portfolio worth hundreds of thousands of dollars.
FAQs
If you're still investing $100 per month, you'd have a total of around $518,000 after 35 years, compared to $325,000 in that time period with a 10% return. There are never any guarantees in the stock market, but with the right strategy, a little cash can go a long way.
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Mark Roussin, CPA has positions in AbbVie, Alphabet, Coca-Cola, Microsoft, Prologis, and Visa. The Motley Fool has positions in and recommends Alphabet, Chevron, Home Depot, Microsoft, NextEra Energy, Prologis, and Visa.
What happens if you invest $100 a month for 40 years? ›
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. But achieving that 10% may be more doable than you'd think.
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For stock investors, Motley Fool services are likely worth the costs given their extensive research and successful past picks.
How much would I have if I invested $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 stock will boom in 2024? ›
Best S&P 500 stocks as of June 2024
| Company and ticker symbol | Performance in 2024 |
|---|
| Constellation Energy (CEG) | 86.0% |
| Deckers Outdoor (DECK) | 63.7% |
| General Electric (GE) | 61.9% |
| First Solar (FSLR) | 57.7% |
6 more rowsThe Best Performing Stocks in History
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- Microsoft. (NASDAQ: MSFT)
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 will I have if I invest $500 a month for 10 years? ›
What happens when you invest $500 a month
| Rate of return | 10 years | 20 years |
|---|
| 4% | $72,000 | $178,700 |
| 6% | $79,000 | $220,700 |
| 8% | $86,900 | $274,600 |
| 10% | $95,600 | $343,700 |
Nov 15, 2023
The 8-4-3 rule of compounding can be your way to achieve the Rs 1 crore corpus goal. Jiral Mehta, Senior Research Analyst, FundsIndia said that in this strategy, if you invest Rs 10,000 every month, assuming annual returns of 12 per cent, it takes 8 years to reach the Rs 16 lakh maturity amount.
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The Motley Fool advises holding onto winning stocks, as they often continue to outperform in the long run. "Double down buy alerts" from The Motley Fool signal strong confidence in a stock, urging investors to increase their holdings.
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How much is $100 a month for 5 years? ›
How much money do you need invested to make $1,000 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 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.
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| Company (ticker) | Analysts' consensus recommendation score | Analysts' consensus recommendation |
|---|
| Nvidia (NVDA) | 1.31 | Strong Buy |
| Amazon.com (AMZN) | 1.32 | Strong Buy |
| Emerson Electric (EMR) | 1.32 | Strong Buy |
| Microsoft (MSFT) | 1.33 | Strong Buy |
19 more rowsThe Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and UiPath. The Motley Fool recommends Alibaba Group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft.
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