"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 much money can you make by investing $10,000? ›
Here's how much you could earn with $10,000 in an IRA
| Time | 6% Annual Return | 8% Annual Return |
|---|
| 10 years | $17,908 | $21,589 |
| 20 years | $32,071 | $46,610 |
| 30 years | $57,435 | $100,627 |
May 13, 2024
Best ways to invest $10,000: 10 proven strategies
- Pay off high-interest debt. ...
- Build an emergency fund. ...
- Build a CD ladder. ...
- Get your 401(k) match. ...
- Max out your IRA. ...
- Contribute to your HSA. ...
- Invest through a self-directed brokerage account. ...
- Open a high-yield savings account.
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.
Is $10,000 enough to start investing? ›
$10,000 is enough to give you access to many investment options. Here are the best options for investing $10,000 through your brokerage, IRA or 401(k) account. Arielle O'Shea leads the investing and taxes team at NerdWallet.
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 interest will I earn on $10,000 in a year? ›
The interest that $10,000 would earn over a year depends on the annual percentage yield and frequency of compounding. For example, a 4% APY that's compounded daily would result in $408.08 in annual interest earnings. You can browse the best high-yield savings account rates to explore your earning potential.
Where should I put 10k right now? ›
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.
Invest in Stocks or Dividend-Paying Funds Invest in dividend-paying stocks or funds that generate passive income through regular dividend payouts. Investing in stocks or dividend-paying funds is a strategy to generate passive income through regular dividend payouts.
Can you turn 10K into a million? ›
If you're willing to stay the course and buy and hold investments that you're willing to be patient with, it's not impossible by any means to grow a $10,000 portfolio to $1 million or more by the time you retire.
There are two approaches you could take. The first is increasing the amount you invest monthly. Bumping up your monthly contributions to $200 would put you over the $1 million mark. The other option would be to try to exceed a 7% annual return with your investments.
How can I double 100k? ›
Doubling money would require investment into individual stocks, options, cryptocurrency, or high-risk projects. Individual stock investments carry greater risk than diversification over a basket of stocks such as a sector or an index fund.
How much can I make if I invest 10k? ›
If you invest $10,000 and make an 8% annual return, you'll have $100,627 after 30 years. By also investing $500 per month over that timeframe, your ending balance would be $780,326. Exchange-traded funds (ETFs) and mutual funds are both excellent investment options.
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.
How much will I make if I invest $100 a month? ›
Investing $100 per month, with an average return rate of 10%, will yield $200,000 after 30 years. Due to compound interest, your investment will yield $535,000 after 40 years. These numbers can grow exponentially with an extra $100. If you make a monthly investment of $200, your 30-year yield will be close to $400,000.
How much does a $10,000 CD make in a year? ›
Earnings on a $10,000 CD Over Different Terms
| Term Length | Average APY | Interest earned on $10,000 at maturity |
|---|
| 1 year | 2.59% | $262.10 |
| 18 months | 2.22% | $338.29 |
| 2 years | 2.07% | $422.32 |
| 3 years | 1.94% | $598.77 |
3 more rowsIf you're willing to stay the course and buy and hold investments that you're willing to be patient with, it's not impossible by any means to grow a $10,000 portfolio to $1 million or more by the time you retire.
How to double 10k quickly? ›
7 Proven Ways to Double $10k Quickly
- Retail Arbitrage.
- Invest in Stocks & ETFs.
- Start an AirBnb.
- Invest in Real Estate.
- Peer to Peer Lending.
- Cryptocurrency.
- Resell Products on Amazon FBA.
