By: Gene Walden, Senior Finance Editor, Thrivent Mutual Funds January 17, 2017
Fifty bucks a month doesn’t buy a lot in today’s world. It might get you a bag or two of groceries, dinner and drinks for one at a nice restaurant, or a couple of tickets and some snacks for date night at the movies.
Or you could use that $50 to start building your nest egg. While $50 a month adds up to only $600 a year, through time and the power of compounding, your $50-a-month investment may contribute significantly to your retirement fund – or your other important financial goals. (See How to Scrounge Up $50 a Month.)
Fortunately, $50 per month is all you need to get started with an investment program through the Thrivent Mutual Funds automatic purchase plan.1 (The $50 starting amount is available only when setting up a $50-per-month (minimum) recurring or automatic purchase plan.) Here are some scenarios that show you how much a $50 investment each month could bring you over a lifetime. (These examples are hypothetical for illustrative purposes only. They are not intended to represent the performance of any particular investment product, nor do they take into consideration any product expenses or fees. The results would be reduced if the costs were included.)
Example 1: We’ll start with an investor in a portfolio that produces an average annual return of 5%.
After 10 years, your $50-per-month contribution (with a 5% annual average return) would have grown to about $7,600; after 20 years it would have grown to about $20,000; after 30 years it would have grown to about $40,000; after 40 years it would have grown to about $73,000; and after 50 years, it would have grown to about $126,000.
Example 2: Let’s say you decide to put your $50 per month investment into a more aggressive investment that provides an average return similar to the S&P 500 Index.2 Over the past 50 years since 1965, the S&P 500 has grown at an average annual rate of 11%.3 While past performance does not guarantee future returns, and investing may involve the risk of loss of principle, let’s say that after the investment's expenses and fees, you are able to earn an average return of 10% per year.
After 10 years, your $50-per-month contribution (with a 10% annual average return) would have grown to about $9,700; after 20 years it would have grown to about $35,000; after 30 years it would have grown to about $100,000; after 40 years it would have grown to about $270,000; and after 50 years, it would have grown to about $700,000.
The chart below gives you an idea of how much an investment of $50 per month could earn for your retirement over your lifetime, depending on your current age (or the age of your children). As you can see, starting at an early age can have a significant effect on how much your portfolio would grow over the course of your lifetime:
As you can see, fifty dollars may not buy much in today’s world, but over time, it could contribute significantly to your retirement nest egg. What are you waiting for?
Start building your nest egg today for a minimum investment of just $50 per month through the Thrivent Mutual Funds Automatic Purchase Plan.
1. New accounts with a minimum investment amount of $50 are offered through the Thrivent Mutual Funds “automatic purchase plan.” Otherwise, the minimum initial investment requirement is $2,000 for non-retirement accounts and $1,000 for IRA or tax-deferred accounts, minimum subsequent investment requirement is $50 for all account types.
2. The S&P 500® Index is a market-cap weighted index that represents the average performance of a group of 500 large-capitalization stocks. You cannot invest directly in an index. Indexes are unmanaged and do not reflect the fees and expenses associated with active management.
3. Source: New York University
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