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February 3, 2025 3 mins
In the prior personal finance tip #97 which was how to save on the little things, we mentioned how to be awarded with Amazon digital credits for delaying delivery and we mentioned buying a monthly car wash plan. 

We also covered the value of buying long term products and services rather than single use items which occur multiple times. Lastly, we covered the value of buying products on the basis of consumption needs. 

Employing this mindset with all of your spending will watch your dollars add up. So we’d like to propose a challenge to you. Can you save $100 a month? 

For most people, the answer is yes and with that comes the ability to invest this money in    yourself. You could do this via tax deferred retirement accounts such as 401(k)s, Roth 401(k)s, Roth IRAs, traditional IRAs and 403(b)s and 457 plans. 

The other option is to have an individual brokerage account where you can buy fractional shares of stock in well-known companies. For example, your $100 monthly contribution may buy $5 worth of Apple, Nvidia, Microsoft, Tesla and so on. 

Many companies offer this including TB Bank, Charles Schwab, Stash and Fidelity where you can also invest money any way that you choose. All you need to do is set up a monthly withdrawal.

Now for simplicity, let’s create a scenario of compound interest: you decide to invest your $100 each month into an S&P 500 fund. A well-known ticker is Vanguard’s VOO. After their expense ratio, it has yielded an annualized return of approximately 9.5% for the last 30 years. 

If you invest that $100 per month at that 9.5% interest, you’d have $181K in 30 years and $980K in 48 years - and this is where compound interest takes over. From years 31 through 48 this account would grow an astounding $699K. 

To take this further:

For $200 a month: after 30 years, you’d have $362K and reach $1M in year 41
For $300 a month: after 30 years, you’d have $543K and reach $1M in year 37
For $400 a month: after 30 years, you’d have $724K and reach $1M in year 34

So needless to say this is awesome; and all you have to do is make some minor adjustments throughout your budget. 

My advice is that you do not want to look back many years from now and say if I just would have eaten out one time less per month, or cut back on streaming subscriptions, bottled water or overspent during the holidays, I could have had all this money. 

So take this heart and pass the word because anyone can be a millionaire.

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Transcript

Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Hello everyone, I am David and you were listening to
the Personal Finance Tip of the Week and this week's
topic is can you find one hundred dollars in your budget?
In the prior personal Finance Tip number ninety seven, which
was how to save money on the little Things, we

(00:27):
mentioned how to be awarded with Amazon Digital credits for
delaying delivery, and we mentioned buying a monthly car wash plan.
We also discussed the value of buying long term products
and services rather than single use items which occur multiple times. Lastly,
we covered the value of buying products on the basis
of consumption needs. Employing this mindset with all of your

(00:51):
spending will watch your dollars add up. So we'd like
to propose a challenge to you. Can you save one
hundred dollars a month? For most people, the answer is yes,
and with that comes the ability to invest this money
in yourself. You can do this with tax deferred retirement
accounts including the following four one ks roth for one

(01:14):
k's roth iras traditional iras and four h three b's
and four fifty seven plans. Another option is to have
an individual brokerage account where you can buy fractional shares
of stock and well known companies. For example, your one
hundred monthly dollar contribution may by five dollars worth of Apple, Nvidia, Microsoft, Tesla,

(01:37):
and so on. Many companies offer this service, including Charles Schwab,
TD Bank, Stash, and Fidelity. And with these companies you
can also invest any way that you choose. The best
way to do it is to set up a monthly withdrawal. Okay,
so now it's time to create a scenario with compound interest.

(02:00):
Let's say that you decide to invest your one hundred
dollars each month into an S and P five hundred fund.
A well known ticker is Vanguard's VOO. After their expense ratio,
it has yielded an annualized return of nine and a
half percent interest, and this is over a thirty year span.

(02:22):
So let's see how this money can add up. You
take your one hundred dollars and at that nine and
a half percent interest that we just mentioned, you'd have
one hundred and eighty one thousand dollars in thirty years.
Then you would have nine hundred and eighty thousand dollars
and forty eight years, and this is where the compound
interest takes over from years thirty one through forty eight,

(02:43):
this account would grow in astounding six hundred and ninety
nine thousand dollars for two hundred dollars. After thirty years,
you'd have three hundred and sixty two thousand dollars and
reach a millionaire status in year forty one. For three
hundred dollars a month, you'd have five hundred and forty
three thousand dollars after thirty years and reach millionaire status

(03:05):
at year thirty seven, and finally, at four hundred dollars
a month after thirty years, you'd have seven hundred and
twenty four thousand dollars and reach millionaire status in the
thirty fourth year. So, needless to say, this is awesome
and all you have to do is make some minor
adjustments throughout your budget. So here is my advice to you.

(03:29):
You do not want to look back many years from
now and say if I just would have eaten out
one time last per month, or cut back on streaming subscriptions,
bottled water or overspent during the holidays, I could have
had all this money. And finally, take all of this
to heart and pass the word because anyone can be

(03:50):
a millionaire.
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