"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
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 to make money with $10 000? ›
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.
The stock market's average return is a cool 10% annually — better than you can find in a bank account or bonds. But many investors fail to earn that 10% simply because they don't stay invested long enough. They often move in and out of the stock market at the worst possible times, missing out on annual returns.
How to turn 10k into passive income? ›
Passive income ideas:
- Create a course.
- Write an e-book.
- Rental income.
- Affiliate marketing.
- Flip retail products.
- Sell photography online.
- Buy crowdfunded real estate.
- Peer-to-peer lending.
In this guide, we'll share the 10 best ways to make $10,000 per month, including:
- Sell Private Label Rights (PLR) products 📝
- Start a dropshipping online business 📦
- Start a blog and leverage ad income 💻
- Freelance your skills 🎨
- Fulfillment By Amazon (FBA) 📚
- Flip vintage apparel, furniture, and decor 🛋
Summary: An investment of $10000 today invested at 6% for five years at simple interest will be $13,000.
How to turn $10 k into $100 k? ›
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 to make $10,000 in a day? ›
How to Legally Make $10k in 24 Hours
- An investment banker, lawyer, doctor, or other high-paid professional could earn $10,000 in a day.
- By closing a big deal or selling many products, a successful entrepreneur could earn $10,000 in a day.
- Having good sales skills could result in a $10,000 commission in one day.
For example, if you put $10,000 into a savings account with a 4% annual yield, compounded daily, you'd earn $408 in interest the first year, $425 the second year, an extra $442 the third year and so on. After 10 years of compounding, you would have earned a total of $4,918 in interest.
Is $10,000 enough to start investing? ›
In terms of $10,000 being enough money to start investing, the answer is absolutely. Even if you're able to invest only a small amount initially, it's an important step toward achieving your financial goals. And as you become more comfortable with investing, you can add more funds to your portfolio.
For most, $10,000 is a lot of money. Typically, that amount of money doesn't just appear out of thin air without some financial strain. However, if you think about $10,000 as saving a little over $27 each day, it becomes much more realistic.
How to make $2,500 a month in passive income? ›
Invest in Dividend Stocks
One of the easiest passive income strategies is dividend investing. By purchasing stocks that pay regular dividends, you can earn $2,500 per month in dividend income. Here's a realistic example: Invest $300,000 into a diversified portfolio of dividend stocks.
How can I make $100 a day passive income? ›
Some popular passive income strategies include investing in dividend-paying stocks, creating an online course, or writing an eBook. These methods require an initial investment of time and effort but can generate a daily return of $100 or more if executed correctly.
How much interest will I earn on $10,000 dollars? ›
Here's what your returns on a $10,000 balance could look like
| 0.46% APY | 5.30% APY |
|---|
| After 1 Year | $46.00 | $530.00 |
| After 5 Years | $232.13 | $2,946.19 |
| After 10 Years | $469.64 | $6,760.37 |
Dec 30, 2023
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.
Is $10,000 too little to invest? ›
Key Takeaways. Using $10,000 in savings to invest or pay down debt is a financially savvy decision. A few of the best investment options include increasing your 401(k) contribution and opening an IRA or 529. Using your savings to make additional payments on your mortgage may make financial sense.
