Is a myth you can only invest if you have lots of money. Investing is not a goal, activity, or task, it’s a habit. It’s something you do regularly, just like you work out, meditate, read or anything else that takes time to yield results.ex: If you invest $500/mo in the S&P500 (an index of the largest US companies) you will get to $1M in 35 years. The S&P500 grows 8% a year on average and it compounds over time.

Investing is habit

<img width="720" height="471" src="https://i0.wp.com/dariusforoux.com/wp-content/uploads/2021/05/become-a-millionaire-with-compounding.png?resize=720%2C471&amp;ssl=1" alt="become a millionaire with compounding" srcset="https://i0.wp.com/dariusforoux.com/wp-content/uploads/2021/05/become-a-millionaire-with-compounding.png?resize=720%2C471&amp;ssl=1 720w, https://i0.wp.com/dariusforoux.com/wp-content/uploads/2021/05/become-a-millionaire-with-compounding.png?zoom=2&amp;resize=720%2C471&amp;ssl=1 1440w"><div> 4 min read</div>My brother, Daniel, who’s seven years younger than I am told me the other day that he doesn’t feel like investing because he’s not able to invest a lot of money. So I said, let’s do some calculations to show that you can become a millionaire by investing with small amounts of money.My goal is to destroy one of the biggest myths of wealth building, which is that you can only get rich by investing big lumps of money. Here’s where it comes from. Let’s say you want to start with investing in an S&amp;P 500 index fund, which is a relatively low-risk way of getting started.And you put in $1000 of your money and you wait a year, and you see something like 8% returns,&nbsp;<a href="https://www.fool.com/investing/how-to-invest/stocks/average-stock-market-return/" dir="ltr">which is about the average for the past 30 years.</a>&nbsp;And you think, “$80? That’s all? What am I supposed to do with that?”How about adding more money? That’s the thing I never understood about investing when I started. The goal of investing is not to generate short-term cash—that’s what your career or business does.The goal of investing is to allocate your capital to assets that usually appreciate over time: Stocks, real estate, land, and so forth. But that appreciation is often underwhelming on the short-term.Assets don’t move much on a day to day or even month to month basis. Take a look at Apple stock over the last three months:<figure><img width="665" height="665" src="https://i1.wp.com/dariusforoux.com/wp-content/uploads/2021/05/apple-stock-1.png?resize=665%2C336&amp;is-pending-load=1#038;ssl=1" alt="" srcset="data:image/gif;base64, https://dariusforoux.com/become-a-millionaire/R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7"></figure>Source: Yahoo FinanceNot impressive right? It started February around $135, went down about $20, and then climbed back to around $130. If you bought it at the height in February, you had a negative return of about 3%. But take a look at what Apple stock did over the past 10 years:<figure><img src="https://i2.wp.com/dariusforoux.com/wp-content/uploads/2021/05/apple-stock-2.png?resize=665%2C334&amp;is-pending-load=1#038;ssl=1" alt="" width="665" height="665" srcset="data:image/gif;base64, https://dariusforoux.com/become-a-millionaire/R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7"></figure>Source: Yahoo FinanceThat’s a return of 962%. $10,000 invested in Apple ten years ago would turn into $106,200.&nbsp;<h2>Become a millionaire with compounded returns</h2>I told my brother about how I adjusted my time horizons when it came to investing. That helped me to be more patient and focus on building actual wealth. So here’s a summary of our conversation about the “500 bucks a month” calculation I mentioned.I asked, “How much can you start with right now? Money you don’t need within the next year. Excluding about six months worths of expenses that you want to keep on your savings account.”“I can miss about 2000 bucks right now,” Daniel said.“Ok great, let’s put that in the <a href="https://dariusforoux.com/stoic-path-to-wealth/" rel="noreferrer noopener" dir="ltr">Vanguard S&amp;P 500 index fund</a>.”Daniel said, “And then what? Even if it does 10% a year over the next years, that’s not that much money.”&nbsp;“True,” I said, “But that’s not all. Investing is not something you do once. It’s a habit. How much can you miss every month from next month?”“I don’t know. 100 bucks?”&nbsp;“C’mon man. You make more than that. You could miss $500. Just spend less on bullshit,” I said.“Where are you going with this?”“So you start out with $2000 bucks in the index fund. You add $500 every month from now. Let’s say the S&amp;P 500 will keep doing 8% a year for the next 35 years and you’ll be a millionaire at 62. You’ll end up with $1,100,854.48.”“Nice.”<h2>Build the habit of investing&nbsp;</h2>Investing is not a goal, activity, or task, it’s a habit. It’s something you do regularly, just like you work out, meditate, read or anything else that takes time to yield results.I’ve been talking about investing with my peers for years now, and it’s sad to see so few of them actually invest. And it’s true on a macro level as well.People assume that investing is for the rich, and that it’s fruitless to invest with a few hundred bucks a month. That is false. And yet, it’s stopping millions of people from investing.That’s a shame because most of us will never earn a lot of money in a year. Only&nbsp;<a href="https://eu.usatoday.com/story/money/2020/07/01/how-much-you-need-to-make-to-be-in-the-1-in-every-state/112002276/" dir="ltr">1% of Americans</a>&nbsp;earn more than $500,000 a year (and this number is probably much lower in other developed countries). While it might sound enticing to earn a lot of money, earning more also comes with more problems.&nbsp;If you’re earning an above-average wage, you’re no worse off than someone who makes half a million or more. And so what if 1% of the population earns a lot of money? It’s only a problem if we don’t profit from capital gains, which is actually how the rich get richer.&nbsp;Every single person needs some form of exposure to assets that appreciate over time, whether that’s in the stock market, real estate, or something else, the point is that you build wealth over time. Investing wisely can help you to have more financial stability when you retire.And if you want to be a millionaire? While it’s not a guarantee, you could do that over time with $500 a month like the example I shared with my brother.&nbsp;But that’s not the point of this thought experiment. <a href="https://dariusforoux.com/financial-and-emotional-freedom/" rel="noreferrer noopener" dir="ltr">Not everyone needs or wants to be a millionaire</a>. If you live in a place with relatively low cost of living, you could put aside $100 and still be better off than putting $0 aside.&nbsp;That’s the point. Think ahead. Invest. And sleep well at night.<h1>Want to improve your life and career?</h1>I'm continually researching ways we can effectively optimize our lives and careers. Join my insiders list to get my latest and most exclusive tips. I’ll also send you my Growth Kit, a bundle of 6 useful resources.<div data-element="fields" data-stacked="false"><button data-element="submit">JOIN NOW</button></div><img alt="🔒" src="https://s.w.org/images/core/emoji/13.0.1/svg/1f512.svg" width="13" height="13"> I value your privacy. 1-click unsubscribe.

So you start out with $2000 bucks in the index fund. You add $500 every month from now. You will become a millionaire in 35 years.

moneyandinvestments

Money & Investments

habits

Habits

My brother, Daniel, who’s seven years younger than I am told me the other day that he doesn’t feel like investing because he’s not able to invest a lot of money. So I said, let’s do some calculations to show that you can become a millionaire by investing with small amounts of money.

My goal is to destroy one of the biggest myths of wealth building, which is that you can only get rich by investing big lumps of money. Here’s where it comes from. Let’s say you want to start with investing in an S&amp;P 500 index fund, which is a relatively low-risk way of getting started.

And you put in $1000 of your money and you wait a year, and you see something like 8% returns, <a dir="ltr" href="https://www.fool.com/investing/how-to-invest/stocks/average-stock-market-return/">which is about the average for the past 30 years. </a> And you think, “$80? That’s all? What am I supposed to do with that?”

How about adding more money? That’s the thing I never understood about investing when I started. The goal of investing is not to generate short-term cash—that’s what your career or business does.

The goal of investing is to allocate your capital to assets that usually appreciate over time: Stocks, real estate, land, and so forth. But that appreciation is often underwhelming on the short-term.

Assets don’t move much on a day to day or even month to month basis. Take a look at Apple stock over the last three months:

Not impressive right? It started February around $135, went down about $20, and then climbed back to around $130. If you bought it at the height in February, you had a negative return of about 3%. But take a look at what Apple stock did over the past 10 years:

That’s a return of 962%. $10,000 invested in Apple ten years ago would turn into $106,200.

Become a millionaire with compounded returns

I told my brother about how I adjusted my time horizons when it came to investing. That helped me to be more patient and focus on building actual wealth. So here’s a summary of our conversation about the “500 bucks a month” calculation I mentioned.

I asked, “How much can you start with right now? Money you don’t need within the next year. Excluding about six months worths of expenses that you want to keep on your savings account.”

“I can miss about 2000 bucks right now,” Daniel said.

“Ok great, let’s put that in the <a dir="ltr" href="https://dariusforoux.com/stoic-path-to-wealth/" rel="noreferrer noopener">Vanguard S&amp;P 500 index fund </a>.”

Daniel said, “And then what? Even if it does 10% a year over the next years, that’s not that much money.”

“True,” I said, “But that’s not all. Investing is not something you do once. It’s a habit. How much can you miss every month from next month?”

“I don’t know. 100 bucks?”

“C’mon man. You make more than that. You could miss $500. Just spend less on bullshit,” I said.

“Where are you going with this?”

“So you start out with $2000 bucks in the index fund. You add $500 every month from now. Let’s say the S&amp;P 500 will keep doing 8% a year for the next 35 years and you’ll be a millionaire at 62. You’ll end up with $1,100,854.48.”

Investing is not a goal, activity, or task, it’s a habit. It’s something you do regularly, just like you work out, meditate, read or anything else that takes time to yield results.

I’ve been talking about investing with my peers for years now, and it’s sad to see so few of them actually invest. And it’s true on a macro level as well.

People assume that investing is for the rich, and that it’s fruitless to invest with a few hundred bucks a month. That is false. And yet, it’s stopping millions of people from investing.

That’s a shame because most of us will never earn a lot of money in a year. Only <a dir="ltr" href="https://eu.usatoday.com/story/money/2020/07/01/how-much-you-need-to-make-to-be-in-the-1-in-every-state/112002276/">1% of Americans </a> earn more than $500,000 a year (and this number is probably much lower in other developed countries). While it might sound enticing to earn a lot of money, earning more also comes with more problems.

If you’re earning an above-average wage, you’re no worse off than someone who makes half a million or more. And so what if 1% of the population earns a lot of money? It’s only a problem if we don’t profit from capital gains, which is actually how the rich get richer.

Every single person needs some form of exposure to assets that appreciate over time, whether that’s in the stock market, real estate, or something else, the point is that you build wealth over time. Investing wisely can help you to have more financial stability when you retire.

And if you want to be a millionaire? While it’s not a guarantee, you could do that over time with $500 a month like the example I shared with my brother.

But that’s not the point of this thought experiment. <a dir="ltr" href="https://dariusforoux.com/financial-and-emotional-freedom/" rel="noreferrer noopener">Not everyone needs or wants to be a millionaire </a>. If you live in a place with relatively low cost of living, you could put aside $100 and still be better off than putting $0 aside.

That’s the point. Think ahead. Invest. And sleep well at night.

I'm continually researching ways we can effectively optimize our lives and careers. Join my insiders list to get my latest and most exclusive tips. I’ll also send you my Growth Kit , a bundle of 6 useful resources.

I value your privacy. 1-click unsubscribe.

Become a Millionaire…With 500 Bucks a Month - Darius Foroux

Investing is habit

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