Investing in the stock market can turn $1,000 into $576,000. Here’s how. | Smart Change: Personal Finance
The stock market can be scary at times, especially during periods of volatility. But it is also a powerful machine for generating wealth.
Investing is one of the easiest and most effective ways to build long-term wealth, and you don’t need a lot of money to get started. Even if you start with less than $1,000, you can grow a portfolio worth more than $500,000 over time. Here’s how.
Investing in the right places
You don’t need to know much about the stock market to start investing. In fact, with some investments, you don’t need to know anything about researching companies or selecting stocks.
for many people Standard & Poor’s 500 The Index Box is a great place to start. This type of investment tracks the S&P 500 index itself, which means it includes the same stocks as the index and reflects its performance over time.
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S&P 500 index funds require very little effort on your part, because you don’t have to worry about picking individual stocks or deciding when to buy or sell. All you have to do is invest consistently, and the fund will do the rest of the work for you.
This type of investment is also a safe option during periods of volatility. The S&P 500 itself has faced countless market dips over the decades, and has managed to recover from them all. No matter how long this current recession lasts, it is very likely that the S&P 500 will eventually recover – and so will your investments.
How Much Can You Earn With an S&P 500 Index Fund?
Perhaps the best part about the S&P 500 Index Fund is that although it is one of the safest investments, it also has many benefits.
Historically, the same index has generated an average rate of return of around 10% per year. This means that while you won’t be earning 10% returns year after year, the ups and downs over time will be around 10% per year.
Let’s say, for example, that you were going to invest $1,000 now in an S&P 500 index fund. If you didn’t make additional contributions and were earning 10% of your average annual return, you would have about $28,000 after 35 years.
The truly The magic happens when you start investing constantly. Let’s say that in addition to your initial investment of $1000, you are also contributing $100 per month. Assuming you’re still making an average annual return of 10%, here’s roughly how much you’ll accrue over time:
|The number of years||Total savings|
The sky is the limit in terms of the amount you can earn through the stock market. The more you can invest each month and the longer you allow your money to grow, the higher your earnings will be.
Is it safe to invest now?
The market is shaky right now, which can be daunting. However, slack periods in the market can actually be one of Better Investment opportunities because prices are lower.
Even if you buy S&P 500 index funds instead of individual stocks, you’ll still pay less for your investments when stock prices fall. When the market inevitably recovers, you could see big gains. If you are looking for a good time to start investing, downturns may be your best opportunity.
However, it is important to maintain a long-term outlook when investing. There is a possibility that the market will get worse before it gets better, and your investments may lose value in the short term. that’s normal. Do your best to stay focused on the future, and remember that no matter how low stock prices go, the market will eventually recover.
Investing in the stock market can yield a life-changing fortune, but it’s important to have a strategy. By investing in the right places, contributing consistently, and maintaining a long-term outlook, you can build a portfolio worth hundreds of thousands of dollars or more.
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