The stock market can be intimidating sometimes, but if you're looking to make a lot of money with minimal effort, investing is one of your best options.
When you invest in the stock market, your savings can grow exponentially over time. You don't need to be wealthy to get started, either. In fact, even if you can only invest a few hundred dollars per month, you could build a portfolio worth $1 million or more. Here's how.
Choosing the right investments
The first step is to determine your investing preferences. If you enjoy researching different companies and digging into nitty-gritty financial details, investing in individual stocks may be the right option for you.
Or if you prefer a more hands-off approach, you may opt for index funds or exchange-traded funds (ETFs). These types of investments track a particular stock market index (such as the S&P 500 or the Nasdaq) and mirror that index's performance. All you have to do, then, is invest consistently and then watch your money grow over time.
Index funds and ETFs may sometimes see lower average returns than buying individual stocks. For many investors, that's a worthwhile trade-off for an investment that requires minimal effort. But be sure you weigh the pros and cons before deciding which investing strategy is right for you.
Growing your money
The next step is to figure out how much you can afford to invest each month. This will depend largely on your financial situation, as well as on how much you're looking to earn and how many years you have to invest.
In general, the more time you give your investments to grow, the less you'll need to invest each month.
Say, for example, you have $1,000 to invest now, and you want to reach $1 million in total savings. Assuming you're earning a modest 8% average annual rate of return, here's how much you'd need to invest each month depending on how many years you have to save.
Number of Years
Amount Invested per Month
Even if you're off to a late start, it's still possible to accumulate a lot of money — you'll just need to up your savings each month.
Regardless of how much you can afford to invest each month, it never hurts to begin saving now. Small investments can add up substantially over time, so it's better to start investing even a little money now rather than avoiding it altogether because you can't save several hundred dollars per month.
Investing is a fantastic way to generate long-term wealth, and it's easier than you may think to grow your money in the stock market. By investing as much as you can afford and sticking with it, you'll be on your way to a million-dollar portfolio.
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