Starting at $0? Here's How You Can Build Up a $500,000 Portfolio in 25 Years

If you're getting started with investing, you shouldn't feel discouraged if you don't have any savings built up. Over time, investing in the stock market and letting your money grow can be a great way to build up your savings and portfolio.

Even if you're starting with $0 in your portfolio, if you make monthly contributions on a regular basis and invest in an index fund that gives you broad exposure to the stock market, you could still end up with more than $500,000 in 25 years, without having to take on significant risk.

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Why tracking the S&P 500 can be a solid investing strategy

If you're committed to investing for the long haul (e.g., at least a couple of decades), a diversified index fund such as the SPDR S&P 500 ETF (NYSEMKT: SPY) can be a great option. It tracks the S&P 500, which is a collection of the leading stocks on U.S. markets. You won't have to worry about which stocks to buy or which ones to avoid. The index comprises high-quality stocks with strong financials, which can be great long-term investments.

Historically, the S&P 500 has averaged an annual return of about 10%. That means if you tracked the index, roughly every seven years, you could expect to see your investment double in value. That's why, for many investors, buying S&P 500 index funds is an easy long-term strategy to set and forget about.

How much would you need to invest every month to get from $0 to $500,000?

To get your portfolio to $500,000 in 25 years, assuming your investment grows at 10% per year, you would need to invest approximately $374 each month. If it grows at a slower rate of 9%, which is possible given the S&P 500's impressive gains in recent years, you'd need to invest about $443 per month. But if it does better than expected and grows by 11% per year, then a monthly investment of a little over $314 would suffice.

There's no guarantee of what the growth rate will be, but it's safe to say that by investing in an index fund that tracks the S&P 500, you can put yourself in an excellent position to build up your savings over the long term. Getting into the habit of making monthly periodic investments can be a terrific strategy to start at any time.

David Jagielski, CPA 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.