Investing $100 A Month — Debunking the Myth
Take Advantage of Dollar-Cost-Averaging
Over the past few years, more and more people have become increasingly aware of their financial picture and future. A lot of that has to do with social media and the internet since that information is being distributed at a level never seen before in human history. Because of that, investing is becoming a more popular way to secure long-term wealth. Unfortunately, many potential investors are still hesitant to take the plunge (or even put their feet in) because they feel that what they have in their savings account or what they can invest per month won’t make a difference anyways. That is a lie that keeps people out of utilizing the American economic engine and creating long-term wealth. Even investing just $100 a month can generate long-term wealth. If you knew you could have nearly an extra $150,000 in 30 years because you put aside $100 a month, would you do it? Let’s explore why it is worth investing at least $100 a month and how to get started on your journey (if you have not already started).
Why Would Anyone Want To Invest At Least $100?
This answer is quite straight forward — compounding interest. Take it from a person, who from historic standards, was pretty smart, Albert Einstein. He once said, “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it”. Compounding interest is when you earn interest on both your initial investment and on any accumulated interest from previous months or years. This means that if you invest $100 each month for 10 years, you will have earned more than if you had just invested a lump sum of $1,200 upfront. With compounding interest, your money starts working for you over time — all thanks to those extra hundred dollars each month!
What Are The Benefits Of Investing At Least $100?
The main benefit of investing at least $100 per month is that it allows you to start building wealth right away without having to wait until you can save up thousands of dollars. Additionally, it provides you with an opportunity to diversify your portfolio so that you are better protected against market volatility and fluctuations in the economy. It gives you peace of mind knowing that your hard-earned cash is generating even more cash for your future endeavors, whatever that might be. Be sure to set up your $100 to be invested automatically each month so that you do not have to think about it. You may start strong by manually investing the first few months, but automation takes out the guess work and ensures you continue to invest. Most of the time, you will not even realize that $100 a month is gone. But, you will notice in 25–30 years when you have an additional $125,000 or more in your account.
How Does Investing at Least $100 Generate Long-Term Wealth?
When done correctly, investing at least $100 each month can give you an edge over other investors who only put in lump sums once or twice a year. Often, they will do a lump sum, but some years they will forget to, prioritize other things, or bypass it completely. By investing consistently rather than sporadically, your investments will compound much faster and generate greater returns over time. By investing constantly throughout the year, you also take advantage of dollar-cost-averaging. Think of dollar-cost-averaging as when you save a little bit of money each month (in this scenario, $100 per month) and put it into investments. That way, if the market goes down one month, you get to buy more shares with your money because they are cheaper. Then when the market goes up again, you will have more shares that can make money. It ensures you are still acquiring shares of companies when they are being sold at “discount” prices, in addition to when the market is performing well. If you only did a lump sum per year, you may be buying at a market peak and not getting your money’s worth.
What Are Some Of The Best Tips And Tricks For Investing At Least $100?
It is important to remember that there is no one-size-fits-all approach when it comes to investing — what works for one person may not work for another. Although, investing in a standard S&P 500 Index fund has worked for millions of people and still does today. With that being said, there are some tips and tricks that everyone should keep in mind before getting started on their investment journey:
1) Do Your Research — Before diving into any kind of investment strategy or product, make sure that you have done thorough research into the company or asset class so that you understand what risks may be associated with it. If you are reading this, that means you are well on your way!
2) Start Small — Don’t expect overnight success when it comes to building wealth; start small with just a hundred dollars and gradually increase as needed and able.
3) Diversify Your Portfolio — Don’t put all your eggs in one basket; spread out your investments across different asset classes (e.g., stocks, bonds, ETF’s, mutual funds, REIT’s, gold/silver, etc.).
4) Stick To Your Plan — Once you’ve created an investment plan for yourself stick with it no matter how tempting short-term gains may look. Outside of investing in robo-advisors, ETF’s, mutual funds, and stocks, consider setting up a meeting with a financial advisor. That time spent is invaluable.
5) Have Patience — In a generation and time of instant gratification, this may be the most difficult step. Building wealth takes time so don’t expect immediate returns; stay disciplined and wait for those returns to happen. Three to five years from now you will look back to see the progress you have made and then investing will become an addiction, not a chore.
Investing at least $100 a month can be incredibly beneficial if done correctly, which thanks to technology is fairly easy to do. With compounding interest and strategic diversification strategies in place, this seemingly small amount can generate significant returns over time which will help ensure long-term financial security down the line for you and your family. Continue to invest and stay invested, regardless of how scary the news may make things seem. Remember, you are buying shares of valuable businesses even when the market is down. See you at the top future millionaire!
This is not financial advice. For educational purposes only.
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