How Investing Just $10 a Day Could Make You a Millionaire by Retirement

Retirement can be incredibly expensive, and with many Americans' finances stretched thin right now, it can be tough to save anything at all for the future.

Investing in the stock market is one of the most effective ways to grow your savings, and you don't need a lot of cash to get started. In fact, it's possible to retire with $1 million or more with just $10 per day. Here's how.

Building long-term wealth in the stock market

Investing doesn't have to mean spending countless hours researching and building a portfolio full of individual stocks. Contributing to your 401(k) or IRA can be a more approachable way to invest, and you can earn far more with this strategy than stashing your spare cash in a savings account.

Image source: Getty Images.

While investing can seem daunting and risky, it's safer than you might think. Mutual funds and index funds can carry less risk than many other types of investments, and depending on where you buy, they can also be more protected against market volatility.

Whether you're investing in a 401(k), IRA, or other type of retirement account, consistency is key. These types of investments thrive over decades thanks to compound earnings, as you earn gains on your entire account balance rather than just the amount you've invested.

Over time, compound earnings can have a snowball effect on your savings. The more you earn on your investments, the greater your account balance will grow, and you'll earn even more. By giving your money as much time as possible to build, you can accumulate $1 million or more while barely lifting a finger.

Turning $10 per day into $1 million or more

Exactly how much you can earn in the stock market will depend on where you invest, but historically, the market itself has earned an average rate of return of around 10% per year over the last 50 years.

That's not to say you'll necessarily earn 10% returns every single year. Some years, you'll earn much higher-than-average returns -- like in 2024, for example, when the S&P 500 earned total returns of more than 23%. Other years, though, you'll earn lower or even negative returns. Over decades, those ups and downs have historically averaged out to roughly 10% per year.

Let's say your investments are in line with the market's long-term performance, earning returns of 10% per year, on average. If you were to invest $10 per day -- or around $300 per month -- here's approximately how much you could accumulate over time.

Data source: Author's calculations via investor.gov.

In this scenario, it would take just over 35 years to reach the $1 million mark. But if you have even a few extra years to invest or can afford to contribute more than $10 per day, you can earn exponentially more in total.

For example, say that you can afford to invest $15 per day, or roughly $450 per month. If you're still earning an average annual return of 10%, those contributions would add up to more than $2.3 million after 40 years.

No matter how much you can contribute each day or month, getting started investing as early as possible is key. The more consistently you invest, the easier it will be to retire a millionaire.

Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.