If you're sitting the market out because, like a lot of people, you don't believe you have enough money to invest, I'm here to tell you that you're wrong. Most of us knew next to nothing about investing when we started taking advantage of compound interest, but we learned a little at a time. And the longer we stuck with it, the more confident we became. All that to say, where you are and what you're feeling is natural. If you're interested in investing, there are all kinds of ways to make $1.43 a day (that's $10 a week) work for you.
Before we look at investment options, let's see what would likely happen if you were to invest $10 a week for 10 years. For the sake of this illustration, let's say your investment earns a 7% annual rate of return.
By the way: If you're wondering if 7% is a realistic rate of return, here's the average rate for several different spans of time:
One more thing about wondering if 7% is a realistic rate of return: That's a great question to ask any time you consider an investment.
$10 a week for 10 years
Let's say you decide to tuck $10 a week under your mattress for 10 years. Since there are 520 weeks in a 10-year period, you would eventually have $5,200 to spend. However, if you invest that same $10 per week for 520 weeks, and that investment earns an average return of 7%, your savings will grow to $7,129.
Some years, the average rate of return will be lower, and some years, it will be higher. What matters is how it does over the long term because investments are made to buy and hold.
Just for fun, here's what would happen if you continued to invest $10 beyond the 10-year mark.
- After 15 years of investing $10 per week, you could expect to have $12,967.
- In 20 years, that number would have grown to $21,154.
- In 25 years, that little $10 a week would be worth $32,637.
- In 30 years, you may be surprised to learn that it's worth $48,742.
And that's just with $1.42 per day.
Options for investing
What's so great about investing is how many options you have. Here are three of them.
1. Certificate of deposit (CD)
If you're feeling a little nervous about risking any of your principal, you can buy a CD at a fixed rate from your bank or credit union. Currently, CDs are enjoying some great rates (although it would be rare to find one that hits 7%). In essence, buying a CD is like loaning your bank money and promising it can keep it for a specific amount of time. In return, your bank pays you a certain interest rate when the CD matures.
Once time is up, you have the option of getting your principal back, plus interest. Or, you can roll it over into another CD. The majority of financial institutions require a minimum deposit of $500 or more, but here are a few that allow you to open a CD with no minimum deposit, and still pay great rates:
Financial Institution | APY | Term |
---|
Ally High Yield CD | 4.65% | 12 months |
Barclays Online CD | 4.50% | 18 months |
American Express National Bank CD | 4.75% as of April 22, 2024 | 11 months |
Capital One 360 CD | 4.80% | 12 months |
Data sources: Ally, Barclays, American Express, Capital One.
Fractional shares are like slivers of stock. Let's say you are wild about Chipotle, but at over $1,800 a share, buying an entire share is a little rich for your blood. So, instead, you buy a sliver of a share. As money permits, you can buy more slivers. In any case, as Chipotle prospers, any slivers you own increase in value.
There's a lot to like about fractional shares. For one thing, they allow you slowly wade into the stock market, learning along the way without betting the entire farm.
3. 401(k)
If your employer offers a 401(k) program, you're in luck. Not only are contributions made with pre-tax dollars (before taxes are withheld), but if your employer matches even a portion of your contributions it's like receiving free money.
If this is your first time investing, the fact that your investments are professionally managed is an advantage. You can follow along online or by combing over your statements to get a sense of how the process works and begin to feel comfortable with long-term investing.
Remember, you don't have to know everything there is to know before you invest. It's okay to start out small and learn more about investments along the way. And if you're tempted to believe that $10 a week is too little to invest, keep those two magic words in mind: compound interest.
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FAQs
$10 a week for 10 years
How much can 10k grow in 10 years? ›
For example, if you put $10,000 into a savings account with a 4% annual yield, compounded daily, you'd earn $408 in interest the first year, $425 the second year, an extra $442 the third year and so on. After 10 years of compounding, you would have earned a total of $4,918 in interest.
What is a good return on investment over 10 years? ›
5-year, 10-year, 20-year and 30-year S&P 500 returns
Period (start-of-year to end-of-2023) | Average annual S&P 500 return |
---|
10 years (2014-2023) | 11.02% |
15 years (2009-2023) | 12.63% |
20 years (2004-2023) | 9.00% |
25 years (1999-2023) | 7.18% |
2 more rows
What is the 10-year rule on investing? ›
The 10-year rule allows beneficiaries flexibility when tax planning for their inherited retirement account distributions. For example, the beneficiary of an account owner who died before the RBD could let the inherited account grow for 10 years and then take one large distribution in the tenth year.
How much is $10,000 at 10% interest for 10 years? ›
If you invest $10,000 today at 10% interest, how much will you have in 10 years? Summary: The future value of the investment of $10000 after 10 years at 10% will be $ 25940.
How to become a millionaire in 10 years investing? ›
Now, let's consider how our calculations change if the time horizon is 10 years. If you are starting from scratch, you will need to invest about $4,757 at the end of every month for 10 years. Suppose you already have $100,000. Then you will only need $3,390 at the end of every month to become a millionaire in 10 years.
Can you double your money in 10 years? ›
The Rule of 72 is focused on compounding interest that compounds annually. For simple interest, you'd simply divide 1 by the interest rate expressed as a decimal. If you had $100 with a 10 percent simple interest rate with no compounding, you'd divide 1 by 0.1, yielding a doubling rate of 10 years.
How much money do I need to invest to make $1000 a month? ›
A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.
How much money do I need to invest to make $3,000 a month? ›
Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.
What is the safest investment with the highest return? ›
Overview: Best low-risk investments in 2024
- High-yield savings accounts. ...
- Money market funds. ...
- Short-term certificates of deposit. ...
- Series I savings bonds. ...
- Treasury bills, notes, bonds and TIPS. ...
- Corporate bonds. ...
- Dividend-paying stocks. ...
- Preferred stocks.
The SECURE Act requires the entire balance of the participant's inherited IRA account to be distributed or withdrawn within 10 years of the death of the original owner. However, there are exceptions to the 10-year rule, and spouses inheriting an IRA have a much broader range of options available to them.
What happens if you invest $1,000 a month for 20 years? ›
Investing $1,000 a month for 20 years would leave you with around $687,306. The specific amount you end up with depends on your returns -- the S&P 500 has averaged 10% returns over the last 50 years. The more you invest (and the earlier), the more you can take advantage of compound growth.
How much will $1,000 invested be worth in 20 years? ›
As you will see, the future value of $1,000 over 20 years can range from $1,485.95 to $190,049.64.
Discount Rate | Present Value | Future Value |
---|
20% | $1,000 | $38,337.60 |
21% | $1,000 | $45,259.26 |
22% | $1,000 | $53,357.64 |
23% | $1,000 | $62,820.62 |
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How long will it take $4000 to grow to $9000 if it is invested at 7% compounded monthly? ›
Substituting the given values, we have: 9000 = 4000(1 + 0.06/4)^(4t). Solving for t gives us t ≈ 6.81 years. Therefore, it will take approximately 6.76 years to grow from $4,000 to $9,000 at a 7% interest rate compounded monthly, and approximately 6.81 years at a 6% interest rate compounded quarterly.
How much interest does $10 000 earn in a year? ›
How much interest can you earn on $10,000? In a savings account earning 0.01%, your balance after a year would be $10,001. Put that $10,000 in a high-yield savings account that earns 5% APY for the same amount of time, and you'll earn about $500.
How many years will it take to double your investment of $10 000 at an interest rate of 6? ›
Time ( t ) = 11.90 Years.
How long does it take to turn $10000 into $100000? ›
If you're saving $10,000 a year and have an additional $7,100 you can put into savings, Singh said a high-yield savings account with a 4% interest rate could take you to $100,000 in 10 years.
How to turn 10K into 100k in 2 years? ›
Here's how to turn 10k into 100k:
- Invest in stocks (try Acorns or Public now)
- Start blogging (click here for the best blogging platform)
- Write an email newsletter (here's my recommendation for the best email marketing software)
- Start an online business (Shopify makes it easy)
- Flip stuff.
How much will 10K be worth in 20 years? ›
The value of $10,000 in 20 years depends on factors like inflation and investment returns. Assuming an average annual inflation rate of 2%, the future value of $10,000 would be approximately $6,730 in today's dollars. However, investing an average annual return of 7% could grow to around $38,697.
What is the growth of $10 000? ›
Growth of 10K (or growth of 10,000) is a commonly used chart that highlights the change in value of an initial $10,000 investment in a financial asset during a given period of time. Often, this period of time is since the asset's inception, or during the 10-year period since its most recent fiscal year end.