benzinga.com
fool.com
I love what-if financial scenarios — where you figure out what would happen if, say, you invested a certain sum regularly over a long period. I’ve made many charts over the years, in fact, showing various scenarios for articles I’ve written.
I think I love these tables because they offer the kind of information that served to wake me up, back in my 20s — and I’ve been grateful for that wake-up call ever since.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
Image source: Getty Images.
Take a gander at the table below. It shows how much money you might amass over time if you sock away $500 per month (that’s $6,000 annually) — or $1,000 per month ($12,000 annually) and you earn an average annual growth rate of 8%.
|
Growing at 8% for |
$6,000 invested annually |
$12,000 invested annually |
|---|---|---|
|
5 years |
$38,016 |
$76,032 |
|
10 years |
$93,873 |
$187,746 |
|
15 years |
$175,946 |
$351,892 |
|
20 years |
$296,538 |
$593,076 |
|
25 years |
$473,726 |
$947,452 |
|
30 years |
$734,075 |
$1,468,150 |
|
35 years |
$1,116,613 |
$2,233,226 |
|
40 years |
$1,678,686 |
$3,357,372 |
Source: Calculations by author.
Why 8%? Well, I know that for building wealth over a long period, it’s hard to beat the stock market, and over many decades, the stock market has averaged roughly 10% annual growth. But over your investment period, which might be the next 10 or 30 years, it could average 6% or 13% or something else. So to be a bit conservative, I used 8%.
Clearly, the table shows that you could amass hundreds of thousands of dollars — or even more than a million dollars — over 30 years. You might get there faster investing larger sums, too.
To aim to earn roughly the stock market’s return, you could invest in a simple, low-fee index fund, such as the Vanguard S&P 500 ETF (NYSEMKT: VOO). It will invest you in 500 of America’s biggest and best companies, which make up about 80% of the U.S. stock market’s value.
The $22,924 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.
View the “Social Security secrets” »
Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
