Is investing $1,000 a month good?
Investing $1,000 a month for two decades is undoubtedly going to help your money to grow, but the specific amount you'll end up with varies depending on the returns you earn. For many people, it's reasonable to expect a 10% average annual return.
If you start by contributing $1,000 a month to a retirement account at age 30 or younger, your savings could be worth more than $1 million by the time you retire. Here's how much you should expect to have in your account by the time you retire at 67: If you start at 20 years old you should have $2,024,222 saved.
The truth is that most investors won't have the money to generate $1,000 per month in dividends; not at first, anyway. Even if you find a market-beating series of investments that average 3% annual yield, you would still need $400,000 in up-front capital to hit your targets. And that's okay.
One example is the $1,000/month rule. Created by Wes Moss, a Certified Financial Planner, this strategy helps individuals visualize how much savings they should have in retirement. According to Moss, you should plan to have $240,000 saved for every $1,000 of disposable income in retirement.
Investing can help you turn your money into more money, even when you start small. A $1,000 investment—whether you pay down debt, invest in a robo-advisor, or get your 401(k) match—can help lay the foundation for a prosperous financial journey.
Discount Rate | Present Value | Future Value |
---|---|---|
2% | $1,000 | $1,485.95 |
3% | $1,000 | $1,806.11 |
4% | $1,000 | $2,191.12 |
5% | $1,000 | $2,653.30 |
We'll play it safe and assume you get an annual return of 8%. If you invest $1,000 per month, you'll have $1 million in 25.5 years.
- Buy an S&P 500 index fund. ...
- Buy partial shares in 5 stocks. ...
- Put it in an IRA. ...
- Get a match in your 401(k) ...
- Have a robo-advisor invest for you. ...
- Pay down your credit card or other loan. ...
- Go super safe with a high-yield savings account. ...
- Build up a passive business.
- Buy US Treasuries. U.S. Treasuries are still paying attractive yields on short-term investments. ...
- Rent Out Your Yard. ...
- Rent Out Your Car. ...
- Rental Real Estate. ...
- Publish an E-Book. ...
- Become an Affiliate. ...
- Sell an Online Course. ...
- Bottom Line.
Years Invested | Balance At the End of the Period |
---|---|
10 | $102,422 |
20 | $379,684 |
30 | $1,130,244 |
40 | $3,162,040 |
What happens if you invest $1,000 a month for 20 years?
Investing $1,000 a month for 20 years would leave you with around $687,306. The specific amount you end up with depends on your returns -- the S&P 500 has averaged 10% returns over the last 50 years. The more you invest (and the earlier), the more you can take advantage of compound growth.
Living on $1,000 per month is a challenge. From the high costs of housing, transportation and food, plus trying to keep your bills to a minimum, it would be difficult for anyone living alone to make this work. But with some creativity, roommates and strategy, you might be able to pull it off.
Advantages of the $1K Per Month Rule
Having more financial cushion in retirement will be helpful, especially in times of rising costs and high inflation. “Achieving the $1,000 a month can provide a level of financial security, as it covers a portion of regular expenses,” Ashton said.
Paying down debt or creating an emergency fund is a way to invest $1,000. Investing $1,000 in an exchange-traded fund (ETF) allows investors to diversify and save on transaction costs. Debt instruments like bonds and Treasury bills are low-risk investments that may offer a steady yield.
- Invest in Real Estate.
- Invest in Stocks and ETFs.
- Get Out of Debt Now.
- Start an Online Business.
- Retail Arbitrage.
- Invest in Yourself.
- How to invest $1,000 to make money fast.
- Play the stock market.
- Invest in a money-making course.
- Trade commodities.
- Trade cryptocurrencies.
- Use peer-to-peer lending.
- Trade options.
- Flip real estate contracts.
After 20 years, your $50,000 would grow to $67,195.97. Assuming an annual return rate of 7%, investing $50,000 for 20 years can lead to a substantial increase in wealth.
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.
Discount Rate | Present Value | Future Value |
---|---|---|
2% | $100 | $121.90 |
3% | $100 | $134.39 |
4% | $100 | $148.02 |
5% | $100 | $162.89 |
- 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.
What stock will make me rich?
Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOGL), and Advanced Micro Devices, Inc. (NASDAQ:AMD) are some of the stocks that will make you rich in 2024, besides Palantir Technologies Inc. (NYSE:PLTR).
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.
Stock | Implied upside* |
---|---|
Apple Inc. (AAPL) | 21.6% |
Nvidia Corp. (NVDA) | 16.3% |
Alphabet Inc. (GOOG, GOOGL) | 7.2% |
Amazon.com Inc. (AMZN) | 7.8% |
- High-yield savings accounts.
- Certificates of deposit (CDs)
- Bonds.
- Money market funds.
- Mutual funds.
- Index Funds.
- Exchange-traded funds.
- Stocks.
Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.
References
- https://www.fool.com/the-ascent/buying-stocks/articles/heres-how-much-money-you-could-have-if-you-invested-1000-a-month-for-20-years/
- https://www.forbes.com/sites/pattieehsaei/2023/10/12/you-can-afford-to-invest-start-with-just-100-per-month/
- https://finance.yahoo.com/news/much-interest-earn-1-million-150000229.html
- https://www.bankrate.com/investing/best-ways-to-invest-1000/
- https://www.fool.com/investing/2023/12/14/want-200-monthly-dividend-income-2024-invest-27000/
- https://finance.yahoo.com/news/500-every-month-passive-income-130041730.html
- https://www.fool.com/the-ascent/banks/articles/what-if-i-can-only-afford-to-save-200-per-month/
- https://fundingsouq.com/ae/en/blog/what-happens-to-50k-over-20-years/
- https://www.nerdwallet.com/article/investing/the-best-investments-right-now
- https://finance.yahoo.com/news/2-5-million-roth-ira-110000154.html
- https://www.investopedia.com/how-to-invest-usd1-000-4584763
- https://money.usnews.com/investing/articles/best-stocks-to-buy-now-with-1000
- https://homework.study.com/explanation/good-news-you-will-almost-certainly-be-a-millionaire-by-the-time-you-retire-in-40-years-bad-news-the-inflation-rate-over-your-lifetime-will-average-about-3-2-a-what-will-be-the-real-value-of-1-m.html
- https://www.nerdwallet.com/article/investing/how-to-invest-500
- https://medium.com/@Levente22/9-simple-tricks-to-make-an-extra-2-500-each-month-at-home-0b6e0e6392ef
- https://www.cnbc.com/2024/02/23/how-dividend-investing-can-make-you-money-while-you-sleep.html
- https://www.paypath.com/Personal/how-to-save-money-easily
- https://www.forbes.com/sites/melissahouston/2024/03/21/how-to-become-wealthy-in-5-years/
- https://www.nasdaq.com/articles/got-%24500-to-invest-monthly-this-exchange-traded-fund-can-make-you-a-millionaire.
- https://thebudgetnista.com/is-saving-500-a-month-good/
- https://www.fool.com/the-ascent/buying-stocks/articles/this-is-how-much-money-you-can-make-by-investing-10k/
- https://smartasset.com/investing/how-to-make-500-a-month-in-passive-income
- https://www.entrepreneur.com/money-finance/7-ways-to-make-money-quick-by-only-investing-1000/303429
- https://finance.yahoo.com/news/heres-investing-50-per-week-115500138.html
- https://www.aol.com/finance/earn-4-000-month-passive-110058270.html
- https://www.thinkbigfg.com.au/turn-20-per-week-into-more-than-100000/
- https://www.nasdaq.com/articles/4-ways-to-grow-$100000-into-$1-million-for-retirement-savings-16
- https://slavic401k.com/boost-retirement-savings-with-the-1000-a-month-rule/
- https://www.fool.com/the-ascent/buying-stocks/articles/will-investing-100-a-month-really-make-a-difference-in-your-net-worth/
- https://www.linkedin.com/pulse/how-make-500-month-uk-rockey-bhai-88udc
- https://www.thriventfunds.com/insights/investing-essentials/investing-50-a-month-could-add-up-nicely-for-your-retirement.html
- https://medium.com/@Levente22/7-proven-ways-to-make-5-000-9-000-per-month-in-passive-income-1aafbf025154
- https://money.usnews.com/money/retirement/articles/what-is-the-1k-per-month-in-retirement-rule
- https://www.nasdaq.com/articles/warren-buffett-winner:-if-you-invested-$1000-in-this-fund-heres-what-it-would-be-worth
- https://flippa.com/blog/radical-fire-how-to-turn-10k-into-100k-12-top-ways-to-do-it/
- https://www.fool.com/the-ascent/buying-stocks/articles/heres-what-happens-when-you-invest-500-a-month/
- https://www.investopedia.com/terms/r/ruleof72.asp
- https://millennialmoney.com/how-to-turn-1000-into-10000/
- https://finance.yahoo.com/news/live-1-000-per-month-200011859.html
- https://finance.yahoo.com/news/want-rich-500-month-fund-113000805.html
- https://tools.carboncollective.co/future-value/1000-in-20-years/
- https://www.robomarkets.com/blog/stock-market/top-stocks/top-10-monthly-dividend-stocks/
- https://www.fool.com/the-ascent/personal-finance/articles/how-long-does-it-take-to-become-a-millionaire/
- https://tools.carboncollective.co/future-value/100-in-10-years/
- https://lyonswealth.com/blog-details/how-much-money-do-i-need-to-invest-to-make-3000
- https://time.com/personal-finance/article/ways-to-invest-1k/
- https://finance.yahoo.com/news/passive-income-7-ways-extra-130052593.html
- https://finance.yahoo.com/news/want-100-super-safe-monthly-102100907.html
- https://www.fool.com/investing/2024/01/28/heres-how-investing-200-per-month-can-create-1-mil/
- https://1199federalcu.org/wp-content/uploads/2021/07/KOFE-APRIL-Newsletter-Money-Saving-Tips-for-Families-EN.pdf
- https://www.benzinga.com/markets/equities/24/04/38024818/gmail-turns-20-if-you-invested-1000-when-google-went-public-20-years-ago-heres-how-much-youd-hav
- https://www.gillianperkins.com/blog/7-passive-income-ideas-easily-make-200-day
- https://www.investopedia.com/articles/investing/110615/investing-100-month-stocks-20-years.asp
- https://www.nerdwallet.com/article/investing/how-to-invest-dividend-stocks
- https://homework.study.com/explanation/how-long-will-it-take-a-300-investment-to-be-worth-800-if-it-is-continuously-compounded-at-12-per-year.html
- https://finance.yahoo.com/news/genius-ways-1-000-month-105500970.html
- https://www.fool.com/investing/2024/03/28/want-300-safe-monthly-dividend-income-invest-43000/
- https://talkmarkets.com/content/how-much-money-do-i-need-to-invest-to-make-3000-a-month?post=431352
- https://finance.yahoo.com/news/heres-much-investing-1-000-103000627.html
- https://finance.yahoo.com/news/10-stocks-rich-2024-140807355.html
- https://www.nerdwallet.com/calculator/compound-interest-calculator
- https://www.investopedia.com/articles/investing/100615/investing-100-month-stocks-30-years.asp
- https://www.mjjaccountants.com.au/wealth-creation-strategy/saving-150-a-week/