The re indicates that Interestingly, A good way to build up your portfolio over the years is to invest on a regular basis.
However, If you don't have thousands of dollars to invest in the stock market today, that shouldn't discourage you from.
Thanks to the power of compounding, even a few hundred dollars each month can put you on a path to creating a portfolio worth several hundred thousand dollars in the future, potentially even more than $1 million (this bears monitoring).
Meanwhile, Below, I'll go over how much your portfolio might one day be worth if you invest $250 per month (which is quite significant). That equates to $3,000 per year, which may not seem a whole lot.
But if you were to keep up that habit for years, you may be surprised just how significant your portfolio may end up becoming over time.
Meanwhile, And there's no need for any complex strategies, either, in light of current trends.
Meanwhile, Simply tracking the S&P 500 index can be a safe and reliable way to grow your portfolio over the long haul. Meanwhile, Image source: Getty Images (which is quite significant).
At the same time, Why tracking the S&P 500 is an ideal option for most investors The S&P 500 index is a collection of the best 500 companies with stock trading on the U.
It includes stocks from all major sectors, and it's what analysts and investors often look to when gauging the strength of the overall market.
On the other hand, And that's why, by tracking the index, you can effectively give yourself a way to benefit from the stock market's long-term growth, in light of current trends.
Nevertheless, There will be occasional bear and years when the index trades negatively, but historically, the S&P 500 has risen by an average of 10% per year.
And while fund managers always try to outperform it, the reality is that most will end up failing to do so (an important development).
Moreover, And if you can't beat it, you may as well try to simply mirror it, which you can do through many exchange-traded funds (ETFs), in today's financial world.
One ETF that charges low fees and gives you exposure to the broad index is the SPDR S&P 500 ETF (SPY 0 (noteworthy indeed). Additionally, It has an expense ratio of just 0.
, for every $10,000 invested, the fund charges $9. 45 in annual fees), and it's a great example of a fund that you can safely invest in on an basis, in today's market environment.
How much could your portfolio be worth over the long term. If you invest $250 monthly into the SPDR S&P 500 ETF, you can be confident that your investment will grow significantly over the long term.
The big question mark, however, is how quickly it will grow. While the S&P has averaged 10% gains for decades, that doesn't mean it's a sure thing to duce a 10% return every year (noteworthy indeed).
In fact, the last time it actually duced a return close to 10% was in 2016, when it rose by 9. Moreover, In four of the past six years, the index achieved gains in excess of 20%.
While that's great news if you were invested in the market during that stretch, it also suggests that the index may be due for a period of cooling down, and that future returns may be lower, given current economic conditions.
The table below shows you how a $250-per-month investment in the SPDR ETF might grow over the long term, at varying average rates between 8% and 10%, thanks to compounding (quite telling).
The analysis reveals can give you an idea of how it might do under average conditions, and also if it does end up underperforming, in today's market environment.
Year 8% Growth Rate 9% Growth Rate 10% Growth Rate 10 $46,041 $48,741 $51,638 15 $87,086 $95,311 $104,481 20 $148,237 $168,224 $191,424 25 $239,342 $282,383 $334,473 30 $375,074 $461,119 $569,831 35 $577,294 $740,962 $957,069 Calculations and table by author, given current economic conditions.
There's no crystal ball to tell you what kind of return you'll end up generating in the long run.
But as you can see, by regularly $250 per month, you could still end up with a portfolio worth more than $500,000 after 35 years, even if you end up averaging an annual return of around 8%, amid market uncertainty.
However, Hopefully, the average return ends up being a bit higher than that, but by being conservative in your assumptions, you can avoid basing forecasts and jections on ideal circumstances and best-case scenarios, in this volatile climate.
But regardless of what the actual average rate ends up being, it's that by keeping up a habit of $250 per month, you can put yourself in a much stronger financial position in the long run (an important development).
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned, in today's market environment. The Motley Fool has a disclosure policy.