"Start investing" is one of the most common pieces of financial advice -- and for good reason. It's a powerful way to build wealth. The stock market has grown about 10% per year, on average, going back decades.
Numbers like that give you an idea of how much investments can grow. But if you're on the fence about investing, it also helps to see some real dollar amounts.
How much money you can make by investing $10,000
Let's say you've saved $10,000. You decide to invest it in the stock market. One easy way to do this would be with a total stock market index fund, which is available with any of the top stock brokers.
We'll err on the side of caution and assume you make an 8% annual return on your investment. Here's how much that $10,000 would grow over the years, without adding any more money to it.
| Year | Return | Ending balance |
|---|
| 1 | $800 | $10,800 |
| 5 | $4,693 | $14,693 |
| 10 | $11,589 | $21,589 |
| 20 | $36,610 | $46,610 |
| 30 | $90,627 | $100,627 |
Data source: Author's calculations.
It's important to mention that the stock market can be volatile, and returns fluctuate. There will be some years where your investments do very well. There will also be some years where your investments lose money. And there will be a lot of years in between those extremes, as well. You won't get a steady 8% return year after year.
However, we know that historically, the stock market has averaged returns in that range. Over time, those returns add up to massive growth. After 30 years, your $10,000 investment could be worth over $100,000.
That's also without adding to it. What if you started by investing $10,000, but then continued investing $500 per month over the next 30 years? Assuming the same 8% return, you'd end up with $780,326.
How to start investing today
One of the most common investing questions is "where do I start?" With so many investment options available, it can feel overwhelming as a beginner.
It's not as hard as it seems. Here's how to start investing:
- Open a brokerage account.
- Fund your account by transferring over money from your bank.
- Choose an investment.
- Place an order.
If you don't have a brokerage account yet, check out our list of the best stock brokers for beginners. These are all easy to use and have excellent customer service, so they're great for those who are new to investing.
The most challenging part is usually choosing an investment. I recommend going with exchange-traded funds (ETFs) or mutual funds. These are investments that spread your money across a large number of stocks or bonds. Instead of needing to pick a bunch of stocks yourself, you can buy an ETF or mutual fund that does it for you.
RELATED: ETF vs. Mutual Fund: What's the Difference?
For example, you could invest in a total stock market ETF or mutual fund. This type of investment provides exposure to the entire U.S. stock market. If you invest in one of these, your investment portfolio will follow the stock market's performance.
That's just one option. No matter your strategy, getting started with investing is one of the best financial decisions you can make. As the numbers show, patient investors can make a significant amount of money.
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FAQs
To potentially turn $10k into $100k, consider investments in established businesses, real estate, index funds, mutual funds, dividend stocks, or cryptocurrencies. High-risk, high-reward options like cryptocurrencies and peer-to-peer lending could accelerate returns but also carry greater risks.
How can I invest $10 000 for quick return? ›
How to invest $10,000: 10 proven strategies
- Pay off high-interest debt.
- Build an emergency fund.
- Open a high-yield savings account.
- Build a CD ladder.
- Get your 401(k) match.
- Max out your IRA.
- Invest through a self-directed brokerage account.
- Invest in a REIT.
To potentially turn $10k into $100k, consider investments in established businesses, real estate, index funds, mutual funds, dividend stocks, or cryptocurrencies. High-risk, high-reward options like cryptocurrencies and peer-to-peer lending could accelerate returns but also carry greater risks.
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 will 10k be worth in 30 years? ›
Over the years, that money can really add up: If you kept that money in a retirement account over 30 years and earned that average 6% return, for example, your $10,000 would grow to more than $57,000. In reality, investment returns will vary year to year and even day to day.
How to invest $10k for passive income? ›
Whether you have $10,000, or much less, in the bank, here are 10 investment options to consider:
- Mutual funds.
- Exchange-traded funds.
- CDs.
- Real estate investment trusts.
- Money market accounts.
- Roth IRAs.
- High-yield savings accounts.
- Brokerage accounts.
Some of the most consistent strategies to double $1,000 include:
- Using the money to start a low-cost side hustle.
- Starting an online business.
- Buying and flipping goods.
- Retail arbitrage.
How realistic is it to get to $1 million? Even with above-average gains of 15% per year, it would still take more than 30 years for a $10,000 investment to grow to $1 million.
How can I double 10k? ›
How to Double 10K Quickly
- 1 – Flip Stuff. Imagine buying a chair at a yard sale for $5, fixing it up, then selling it online for five times as much. ...
- 2 – Start a Blog. ...
- 3 – Invest in Real Estate. ...
- 4 – Start an Online Business. ...
- 5 – Write an Email Newsletter. ...
- 6 – Help Others Learn.
Flipping a house with $10k is possible! Buy low, use the 70% rule to price, find off-market deals, and prioritize budget-friendly rehabs. Consider HELOCs or hard money loans for financing. Sell fast to boost your ROI.
Some experts recommend withdrawing 4% each year from your retirement accounts. To generate $500 a month, you might need to build your investments to $150,000. Taking out 4% each year would amount to $6,000, which comes to $500 a month.
How much money do I need to invest to make $4000 a month? ›
Making $4,000 a month based on your investments alone is not a small feat. For example, if you have an investment or combination of investments with a 9.5% yield, you would have to invest $500,000 or more potentially. This is a high amount, but could almost guarantee you a $4,000 monthly dividend income.
How to make $500 a month in dividends? ›
That usually comes in quarterly, semi-annual or annual payments. Shares of public companies that split profits with shareholders by paying cash dividends yield between 2% and 6% a year. With that in mind, putting $250,000 into low-yielding dividend stocks or $83,333 into high-yielding shares will get your $500 a month.
How much will I make on a 1 month treasury bill? ›
1 Month Treasury Rate is at 5.56%, compared to 5.51% the previous market day and 5.95% last year. This is higher than the long term average of 1.46%. The 1 Month Treasury Rate is the yield received for investing in a US government issued treasury bill that has a maturity of 1 month.
What if I invested $1000 in S&P 500 10 years ago? ›
Over the past decade, you would have done even better, as the S&P 500 posted an average annual return of a whopping 12.68%. Here's how much your account balance would be now if you were invested over the past 10 years: $1,000 would grow to $3,300. $5,000 would grow to $16,498.
How can I turn $1000 into $10000 fast? ›
6 Ways to Turn $1000 into $10000
- Invest in Real Estate.
- Invest in Stocks and ETFs.
- Get Out of Debt Now.
- Start an Online Business.
- Retail Arbitrage.
- Invest in Yourself.
- High-yield savings accounts. ...
- Cash management accounts. ...
- Money market accounts. ...
- Short-term corporate bond funds. ...
- Short-term U.S. government bond funds. ...
- Money market mutual funds. ...
- No-penalty certificates of deposit. ...
- Treasurys.
Here are seven of the best ways to invest $5,000:
- S&P 500 index funds.
- Nasdaq-100 index ETFs.
- International index funds.
- Sector ETFs.
- Thematic ETFs.
- Real estate investment trusts (REITs).
- Investing with the greats.
Here's my list of the 10 best investments for a 10% ROI.
- How to Get 10% Return on Investment: 10 Proven Ways.
- High-End Art (on Masterworks)
- Invest in the Private Credit Market.
- Paying Down High-Interest Loans.
- Stock Market Investing via Index Funds.
- Stock Picking.
- Junk Bonds.
- Buy an Existing Business.
