Investing Myth: You Need $10,000 to Start Investing. Here's Why $100 Is More Than Enough
Key Points
Focus on investing regularly and meaningfully.
This is more important than your starting amount.
Sticking with a low-fee index fund can be all you need.
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There are many investing myths. Some think, for example, you can only buy shares in groups of 100. That's not true -- you can buy as little as a single share or 177 shares, or however many shares you want. (If you're a millionaire or billionaire planning to buy 5% or more of a company's shares, though, there are some regulatory hoops to jump through.)
Similarly, some people think that you need to have a lot of money if you want to start investing -- perhaps $10,000 or so. That's also not true. It is true that some mutual funds have minimum investment amounts, such as $3,000, and some funds may have higher ones.
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You can amass a considerable sum by investing in the stock market -- even if you begin with, say, $100. Much more important than your starting sum is that you keep investing regularly, ideally with meaningful sums. (A meaningful sum for one person might be out of reach or ridiculously little for another person.) It's also vital to invest effectively, such as in a low-fee, broad-market S&P 500 index fund.
The table below can help you see how much you might amass over time. We'll use a slightly conservative 8% average annual growth rate, because the S&P 500 has averaged annual returns close to 10% (ignoring inflation) over long periods. One column reflects monthly $100 investments ($1,200 per year), and the other weekly $100 investments ($5,200 per year).
|
Growing at 8% for |
$1,200 invested annually |
$5,200 invested annually |
|---|---|---|
|
5 years |
$7,603 |
$32,947 |
|
10 years |
$18,775 |
$81,357 |
|
15 years |
$35,189 |
$152,486 |
|
20 years |
$59,308 |
$256,999 |
|
25 years |
$94,745 |
$410,563 |
|
30 years |
$146,815 |
$636,199 |
|
35 years |
$223,323 |
$967,731 |
|
40 years |
$335,737 |
$1,454,861 |
Source: Calculations by author.
Remember that if your income increases over time, so too could your contributions to investment accounts. So with any luck, you'll be able to outperform the numbers above. Don't wait to start investing.
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