It seems as if it is getting harder for the average American to know how much to invest after covering their costs of living.
However, it is still possible to invest, even if it is only a few hundred dollars a month.
Imagine, for example, a 31-year-old Ariel, who has an annual salary of $ 48,000 and $ 120 to invest in investing in the S&P 500 per month.
Ariel doubts whether her contributions will be effective in building long -term wealth, but she has noticed that more money accumulates without doing anything other than investing $ 120 a month consistently.
It plans to keep this plan in the next 10 years without changing the original amount.
The Federal Reserve of 2022 consumer finances investigated that the young person than 35 years have invested an average of $ 68,650 in shares, but the median stock ownership was much lower at $ 12,000.
The average and median balance between stock ownership increases with age:
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35 to 44 years old: on average $ 195,400; $ 30,000 median
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45 to 54 years old: on average $ 374,810; $ 68,650 median
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55 to 64 years old: on average $ 740.110; $ 111,000 median
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65 to 74 years old: on average $ 838,470; $ 160,000 median
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75 years old or older: on average $ 1,005,160; $ 119,500 median
This tells us that the national average of $ 68,650 for people younger than 35 years old is probably higher than a small percentage of people who have more money to invest while they are younger or later in their career in their career.
Read more: 82% of Americans miss a savings account that pays the national average more than 10 times
If Ariel keeps track of her investment plan of $ 120 per month or $ 1,440 per year, until she is 41 years old, she has invested $ 14,400 without taking returns into account.
If Ariel continues to keep track of investing consistently every month, but decides to increase the amount to $ 200 per month for the next 10 years, then she has invested $ 24,000 – which is $ 10,000 more by simply investing $ 80 per month .
However, there are alternative methods for Ariel or someone else who wants to build wealth if it is impossible to increase the initial investment amount or to reduce other costs of living.
