It’s easy to write off today’s stock market as boring — the S&P 500 is still down 6.6% from a year ago. But don’t let that talk you into joining the market’s long-term money-making power.
A dollar invested every day for the past 20 years would now be worth $12,688. That means you’ll more than double your cash outlay of $5,000 during that time despite market ups and downs. And that’s just investing your profit basically in pocket change. Putting more substantially in the S&P 500 would have paid off handsomely, even though the market looks like it’s going nowhere.
And it’s important to know how much regular investing can pay off, especially as some professionals fear the market may continue to move sideways. “We think this year is basically going to be spent in a range where the end of April 2022 sees the S&P 500 trading around 3,600 and upside down around 4,300,” said Scott Wren, senior global market strategist at Wells Fargo.
Maybe so. But big money can still be made in the long run.
Investors are increasing investment strength
Given the S&P 500’s enormous money-making power, why wouldn’t people invest? Still, investors are still concerned about putting money into the seemingly idle S&P 500.
In April, 24% of Americans said they were taking money out of stocks and investments, up from just 18% who did in December, an IBD-TIPP poll conducted in late March said. And only 33% of Americans were looking at new investments, down from 34% when asked in late February.
Meanwhile, just 46% of Americans were bullish on stocks, down from 51% in March. And bearish Americans rose to 21% in an April poll, up from 19% in March. But it’s at least an improvement over last year. About 30% of Americans polled about stock futures in late December were bearish.
“Investor expectations of growth have increased, climbing from the trough in June 2022,” Vanguard said. “Investors’ upbeat assessment of growth prospects echoed strong economic indicators, including the unemployment rate hitting a 54-year low,” said Xiao Xu, an analyst at Vanguard Investment Strategy Group.
Turning into $1 thousand per day
Remember that huge profits by investing just one dollar a day is a starting point. Much bigger gains are not only possible, but likely.
The S&P 500 has faced numerous challenges over the past 20 years, including a severe financial crisis in 2008-2009, a pandemic and an attack on the White House. And remember, the S&P 500 is a diversified basket of dog-owned stocks, not just the winners of the S&P 500. And it owns all sectors, not just the leading ones.
But that’s the real magic. It doesn’t take much to turn the S&P 500 into a source of wealth. In fact, if you were to make your daily contributions of just $10 a day, you’d have $126,888 in 20 years. That’s a profit of over $76,000 on a $50,320 cash outlay.
And 100 dollars a day? You’ll be a millionaire in 20 years sitting on about $1.3 million.
So you can bemoan the fact that you didn’t start investing in the S&P 500 two decades ago. Or you might be sitting on your hands, thinking you’ll wait for a better time to invest. Or, you can put down a dollar a day and wait for your big profit.
Just pay off a dollar a day
How much would you have now if you invested daily for 20 years?
|Daily investment||End value|
Source: S&P Global Market Intelligence, IBD
Follow Matt Krantz on Twitter @mattkrantz
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