The initial investment amount is $500
If you’re going to invest, I think $500 a month is a good amount.
This is because it’s an amount that allows you to feel the returns of your investment without significantly straining your daily living expenses.
Although it may differ from country to country, nowadays, you can invest in stocks with just a few dollars.
However, investing a small amount means that the returns will also be small.
As I mentioned in a previous article, the average return of the S&P 500 in the US over the past 30 years is +7.89%.
- If you invest $5, the annual profit would be $0.4.
- If you invest $500, the annual profit would be $40.
If you consider getting $40 without doing anything, isn’t that enough?
If you continue investing $500 for 12 months, the annual profit would be $473.
You can earn the equivalent of about one month’s investment amount just from the profits.
Investment has the power of compound interest.
Compound interest means you earn interest on both the money you put in and the interest that has already been added.
For example, if you invest $100 at a 5% interest rate, after one year you have $105. In the next year, you earn interest on $105, not just the original $100. This way, your money grows faster over time because you are earning interest on a bigger amount each year.
So, compound interest helps your money grow more quickly than simple interest, where you only earn interest on the original amount.
If you continue investing $500 every month for 10 years, your assets will increase as follows:
In 10 years, you will accumulate a profit of about $27,000.
As someone who is not a professional investor, what I can do to grow my assets is to increase my ability to invest and to keep at it. That’s all.
It may seem like a small accumulation, but whether you do it or not will make a big difference 10 years or 20 years from now.
If you’re thinking of starting to invest, why not start with a target of $500?
