What This Article Answers
This article explains what happens if you invest $500 per month for 30 years. It looks at total contributions, long-term growth, and how compounding affects the final outcome.
Assumptions
- Monthly contribution: $500
- Time horizon: 30 years
- Annual return: 7%
- Contributions made monthly
- No taxes considered (tax-advantaged account)
The Outcome
Over 30 years, investing $500 per month results in a substantial portfolio value, even though the total amount contributed is much lower. Most of the final value comes from compounded growth rather than direct contributions.
Breakdown
| Metric | Value |
|---|---|
| Monthly contribution | $500 |
| Total contributed | $180,000 |
| Final value | TBD |
| Growth from compounding | TBD |
Why This Happens
Compounding allows early contributions to grow for decades. Each year of growth builds on the previous year, which means later gains are significantly larger than early ones.
Variations to Consider
- What if you started 10 years later?
- What if returns averaged 5% instead of 7%?
- What if contributions increased over time?
Key Takeaways
- Time has a larger impact than contribution size
- Most growth occurs in later years
- Small, consistent investments compound meaningfully