A dollar a day isn’t very much money. It adds up to just $365 per year. And almost anyone can come up with $1 a day to invest in the stock market.
But if you put $1 a day into the market, what exactly could happen?
You could end up with more than six times what you contributed
If you invested $1 every day in the stock market, at the end of a 30-year period of time, you would have put $10,950 into the stock market. But assuming you earned a 10% average annual return, your account balance could be worth a whopping $66,044.
Under these assumptions, you’d end up with over six times the money you saved. And the reason for that is simple. The initial investments you made would grow exponentially if you left the money alone. That $1 you invested on day one would eventually turn into $17.45 of value on its own — and it would do that because as the $1 earned a return, the money would be reinvested and earn more returns, and so on over time. This is called compounding.
Obviously, the longer the timeline you leave your money invested, the more time compounding has to grow your wealth. If you invested $1 a day for 50 years, for example, you’d end up with over $467,000 — and the initial dollar you invested on day one would be worth about $117.
Can you get rich on $1 a day?
As the numbers show, you can dramatically grow your account balance over time, even if you start with investing $1 a day. But to get rich on just $365 per year in annual investing, you’d have to start very early.
Say, for example, a child’s parents started the $1-a-day plan the year they were born and the child took over as an adult and so $1 a day was saved every day for 65 years. At the end of that time, that lucky person could have around $1.9 million. While that’s certainly a generous sum, it’s not as much as you think after taking 65 years’ worth of inflation into account.
For most people, saving $1 a day isn’t enough — by itself — to make them rich. But the fact that you can end up with tens of thousands, or even hundreds of thousands or millions of dollars, from a $1 investment just shows the power of small, consistent effort.
If investing just $1 a day could give you almost $70,000 by the time of retirement, imagine what $2 a day or $5 a day or $10 a day could do. Saving these sums could be doable if you make an effort. Giving up having lunch out, cutting your cable or cellphone service to a cheaper plan, or working an extra hour a day as a side gig could free up the cash you need to invest this much. And the power of compounding will magnify the effort you’re making, allowing you to build the financial security you deserve over time.
View more information: https://www.fool.com/investing/2021/08/18/what-could-happen-if-you-invested-1-a-day-in-the-s/