Don’t have a lot of money to invest in the stock market? With enough time and dedication, you don’t need a big lump sum to build up a sizable portfolio. If you can trim $50 per week from your budget and put that money into the stock market on a regular basis, that could eventually grow into a portfolio worth hundreds of thousands of dollars.
Below, I’ll show you how much growth a $50-per-week investment might generate over a 25-year period, and what specific investment you should consider to balance your risk exposure and long-term returns.
For most people, the simpler they can keep their investing strategy, the easier it’ll be to manage their holdings and keep up their regular contributions. That’s why investing in an exchange-traded fund (ETF) that tracks a major index like the S&P 500 is such a popular choice for many.
The S&P 500 provides exposure to the largest and best U.S. stocks while also offering diversification across different industries. One popular option is the SPDR S&P 500 ETF Trust (NYSEMKT: SPY). It has a low expense ratio of 0.09%, which ensures your annual cost of owning the fund is minimal, making it a suitable long-term holding. And with this ETF, your returns closely track those of the index, which has historically averaged gains of around 10% per year.
Investing $50 per week is the equivalent of setting aside about $2,600 on an annual basis. Multiply that over a period of 25 years, and that comes out to around $65,000 in total contributions.
That’s a sizable sum on its own, but the table below illustrates how investing that money in a fund like the SPDR S&P 500 ETF can accelerate the growth of your savings significantly. I’ve outlined what your portfolio might look assuming the market sees an annualized return of 8% to 10%. The high end of the range might be in line with index’s historical average, but markets fluctuate (as do year-to-year returns), so considering more conservative rates of return is advisable too.
|
|
Future Portfolio Value Assuming a $50 Weekly Investment |
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|---|---|---|---|
|
|
Growth Rate |
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|
Year |
8% |
9% |
10% |
|
5 |
$15,994 |
$16,429 |
$16,879 |
|
10 |
$39,847 |
$42,184 |
$44,693 |
|
15 |
$75,420 |
$82,561 |
$90,530 |
|
20 |
$128,473 |
$145,859 |
$166,066 |
|
25 |
$207,594 |
$245,092 |
$290,543 |
Calculations by author.
Over a period of 25 years, your portfolio could grow to more than $200,000, even if the S&P 500 sees its annual return shrink to 8%. This is more than triple the value of what you personally contributed during that period. And the more money you end up investing, the greater your final balance should be.
