# How Investing Every Month Can Make You a Millionaire

So, you have decided to invest your money and have a goal of reaching the million-dollar club? But you aren’t sure how to attain that milestone. Or for that matter, you are not sure how much you will need to invest in order to get there. There is no get rich quick scheme when it comes to legitimate investing. It will take discipline and smart decision making. But it can be reached.

You don’t necessarily have to invest your money in the stock market to reach this milestone. However, stocks have proven over decades as the investment vehicle with the highest return on investment potential over the long-term. It may be less risky to store your funds in a savings account or IRA, but the reward on those strategies is far inferior to stocks. The difference maker will be compounding returns by reinvesting any dividends or interests. The compound effect will build the portfolio like a snowball rolling downhill.

Let’s exam multiple scenarios of how a million-dollar portfolio can be built over time. We will use the S&P 500 index to calculate the annual return on investments. The S&P 500 is the benchmark for gauging how the overall stock market is performing. So, over the past 20 years the index has returned an annualized rate of 8%. We will use the 8% rate as the source for the below scenarios.

**$100 Per Month **

Starting with $0 in a portfolio and assuming an 8% annual return on investment with monthly contributions of $100, how long would it take to reach a million-dollar value?

It may be alarming, but it would take 54 years to reach the millionaire status. The total dollar value would be $1,017,508. The obvious problem is how long it takes to get there. Very few people have 54 years of investable income to use, or even have remotely the patience.

Now, if the portfolio starts with invested assets of $10,000, then the number of years to reach one million dollars would decrease by 6, and would require 48 years. The portfolio would be valued at $1,037,317. The larger the starting balance, the faster the compounding will build. Starting with $25,000 would again cut the contribution years by 6, so that in 42 years the portfolio would read $1,027,787.

**$200 Per Month **

It’s pretty clear very few people are willing to put in half a century before reaching millionaire status. So, you decide to increase your monthly contributions with the hope that it will take fewer years to reach your goal. The hope is that the additional money will create larger compounding over the years.

It’s true the more money you invest; the less time it will take to build its worth. Starting from scratch and investing $200 each month, it would take 45 years to reach a million-dollar value. The estimate would $1,001,823. Now, if a person started off with $10,000 to invest, then it would take 42 years to reach an estimated $1,041,994. For those who already have a leg up with $25,000 towards this goal it would now take 38 years to reach $1,036,691.

**$300 Per Month **

You are someone who is not interested in making contributions for over 40 years, but you are also not looking to stretch your budget too far. Well maybe $300 every month seems to be ideal. You see that any lower dollar amount would take at least 40 years to reach the millionaire club. Sacrifices may be necessary along the way, but $300 each month is not staggering enough that it isn’t achievable.

Say you started off with a new portfolio and zero dollars invested. Each month $300 was contributed and the annual return on investment is 8%. In 40 years, that portfolio would be worth an estimated $1,007,212. If you considered having a beginning balance of $10,000, you could cut 2 years off and in 38 years reach the millionaire status with a value of $1,042,841. However, if you happened to somehow have $25,000 to start off with, it would only take 35 years to amass $1,039,601.

**$500 Per Month **

A strong income earner or a driven investor may contribute a larger amount than the average investor. These individuals have the advantage of pouring in more opportunities for compounding. They see a couple hundred dollars invested each month is taking too long to multiply. So, their mission is to contribute $500 each month until they reach the millionaire status.

The beginning balance is zero, but you are going all in for $500 each month. Not a bad choice. A new balance of $1,027,901 would be seen, but it would take 34 years to get there. If you would like to shorten he necessary time, the beginning balance would need to be higher. With $10,000 as an intro balance and 33 years later, those $500 dollar contributions would have compounded to $1,072,520. Let’s allow the high earner to start with $25,000. Compounded annually for 31 years, its value would be $1,070,973.

**Escalation Approach **

A systematic and proven method would be an escalation approach. This means after every year the monthly contribution amount will be increased until it cannot be raised higher. This strategy is ideal for young adults beginning their careers who cannot invest large sums of money just yet, but have the opportunity to increase their earnings over the years.

The first scenario is starting the first year with $100 monthly contributions and then each year raise the monthly amount by $10. So year one would be $100, year two would be $110, year three would be $120, and so on. Starting with no money before taking on this strategy, it would take 45 years to reach $1,054,150. With a generous $10,000 beginning, it would take 42 years for the portfolio to display $1,072,529. For those fortunate ones starting with $25,000, the millionaire club is closer in reach since it could take 38 years to eventually reach $1,046,513.

The other scenario is escalating at a faster pace. The monthly contributions would increase by $25 year after year. For instance, year one is $100, year two is $125, year three is $150, and so on. Your contributions can get pretty high with this approach before hitting the million-dollar line. With the monthly contributions being $1,025 in year 38, the value would finally be $1,023,909. With $10,000 already available, it would be 36 years until $1,014,130 was topped. Now, 34 years and $1,052,572 is for the $25,000 starting bonus participants.

**A Way to Invest More **

A simple, but smart way to invest more into your portfolio is to save more. The average costs for a cup of coffee is $2.70. If we assume someone purchases a cup per day (30 days) that would total $81 a month. Instead of buying that cup of coffee and instead adding that $81 to your monthly contributions you would take off 2-3 years towards the million-dollar milestone. Giving up a simple daily habit can evolve into something substantial over time.

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