Investing every month is a great habit to get into.
There are many ways to try and cut costs and save money. From canceling unused subscriptions to consolidating debts to spending less money on eating out, cost-cutting moves can potentially give you some room to put money aside and invest. And there's a big incentive to do so: It can help you become a millionaire.
If you can shave off $10 per day in costs, or $300 per month, and regularly invest that into a growth-focused exchange-traded fund (ETF), you can eventually have a portfolio worth more than $1 million. Here's how.
A growth-focused fund will allow you to generate the best long-run returns
You can invest in the S&P 500 to get broad and diverse exposure to the stock market. Over time, your returns will increase at the index's long-term average rate of around 10%. But if you are investing and have decades of years to go, then focusing more on growth stocks can be advantageous to you. While you take on a bit more risk by doing so, you can achieve better returns in the end. While growth stocks may experience volatility and there could be a bad year (like 2022), in the long run they are likely to rise in value and outperform broader and more diverse funds.
One fund that is particularly attractive is the Vanguard Growth Index Fund (VUG 0.47%). As the name suggests, it is a growth-focused fund that targets some of the best stocks in the world. It has a minuscule expense ratio of just 0.04%, which will ensure that fees don't eat up much of your returns. And at close to 200 stocks, there's some excellent diversification there as well. Top stocks such as Microsoft, Apple, and Nvidia make up its top-three holdings and account for close to one-third of the fund.
Over the past 10 years, the Vanguard Growth Index has generated returns of 270%, outperforming the S&P 500, which is up 177% during the same time period. At 270%, the fund's compounded annual growth rate averages out to 14%.
How $300 per month can turn into to $1 million
If you invest $300 each month, that comes out to $3,600 over the course of a full year. And after 30 years of investing, that would total $108,000. But with the power of compounding, your portfolio's value could rise far higher than that.
Assuming you invested $300 every month into the Vanguard Growth Index Fund and it achieved gains of 14% per year on average, then this is how your portfolio's value could grow over the years.
| Year | Balance |
|---|
| 5 | $26,160.22 |
| 10 | $78,627.41 |
| 15 | $183,856.13 |
| 20 | $394,903.88 |
| 25 | $818,183.31 |
| 26 | $944,257.50 |
| 27 | $1,089,159.85 |
| 28 | $1,255,702.22 |
| 29 | $1,447,116.37 |
| 30 | $1,667,116.69 |
Calculations by author.
It would take between 26 and 27 years for your portfolio to hit the $1 million mark. That means if you start investing $300 per month at the age of 39, that could still be enough time to get to $1 million by the time you retire, assuming you do so at the age of 65. If you don't start investing until later in life, you can of course make up for this by investing more money. Either way, it's a fairly simple strategy that any investor can deploy: Put money aside every month, and put it into a diversified growth fund such as the Vanguard Growth Index Fund.
Admittedly, 14% is a high average annual return, and your actual returns and growth rate will undoubtedly vary. However, you'll be giving yourself a great opportunity to profit from growth stocks in the long run by investing in this ETF.
There's never a bad time to invest
Even if the current economic conditions can make it difficult to save money, putting any amount aside into an ETF can be a great move for investors. Getting into the habit of saving and investing every month is a great routine to start. Many brokerages nowadays offer low- or no-cost commissions, making it worthwhile to even invest small amounts of money into ETFs. And in the end, you'll be better off for it by being in a much stronger financial position by the time you retire.
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
FAQs
If you invest $300 each month, that comes out to $3,600 over the course of a full year. And after 30 years of investing, that would total $108,000. But with the power of compounding, your portfolio's value could rise far higher than that.
What are the 10 stocks the Motley Fool recommends? ›
See the 10 stocks »
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.
How much do I need to invest a month to make a million dollars? ›
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 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
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? ›
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.
Is Motley Fool worth it? ›
For investors looking for stock ideas and actionable guidance, Motley Fool is likely worth the reasonable annual fees. The stock research alone can pay for the membership cost if you invest in just a couple successful picks. However, more advanced investors doing their own analysis may not find sufficient value-add.
What is the ultimate portfolio Motley Fool? ›
The Ultimate Portfolio for 2022 is a model portfolio built from stocks recommended in Stock Advisor and Rule Breakers, and works as an example for how you can better manage your risk through diversification without sacrificing your return potential.
What are Motley Fools top 5 AI stocks? ›
The 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. The Motley Fool has a disclosure policy.
How to be a millionaire in 5 years? ›
Here are seven proven steps to get you wealthy in five years:
- Build your financial literacy skills. ...
- Take control of your finances. ...
- Get in the wealthy mindset. ...
- Create a budget and live within your means. ...
- Step 5: Save to invest. ...
- Create multiple income sources. ...
- Surround yourself with other wealthy people.
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 to turn 100k into a million? ›
If you keep saving, you can get there even faster. If you invest just $500 per month into the fund on top of the initial $100,000, you'll get there in less than 20 years on average. Adding $1,000 per month will get you to $1 million within 17 years. There are a lot of great S&P 500 index funds.
How long in years will it take a $300 investment to be worth $800 if it is continuously compounded at 12% per year? ›
Thus, it will take approximately 8.17 years.
What if I invest $400 a month? ›
Historically, a diversified stock portfolio has earned an average of 10%. But even if you only got 7%, by investing $400 a month for 40 years, you'd have over $1 million to spend in retirement. A good rule of thumb is to invest a minimum of 10% to 15% of your gross income for retirement.
How to turn $500k into $1 million? ›
How to turn $500,000 into $1,000,000? To turn $500,000 into $1,000,000, you need a sound investment strategy. Diversifying your investments across a mix of asset classes like stocks, bonds, and real estate can help.
How much is $300 a month for a year? ›
$300 monthly is how much per year? If you make $300 per month, your Yearly salary would be $3,600.
How much will I make if I invest 200 a month? ›
If you're investing $200 per month while earning a 10% average annual return, you'd have around $395,000 after 30 years. While that's a long time to invest, keep in mind that this investment requires next to no effort. All the stocks are chosen for you, and you never need to decide when to buy or sell.
How much will I make 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.
