Investing is a long-term game, and even if you don't have a lot of money to invest right now, there's no better time to start. Even if you add just $50 every week to your portfolio, if you do it consistently, those fairly small sums will add up and grow over years and decades. And as you build up a bigger balance, your gains can accelerate markedly.
Here's a look at just how big your portfolio could grow from investments of $50 every week.
The big payoffs start to come after a few decades
If you invest $50 every week, that's the equivalent of setting aside $2,600 per year. And if you do that over the course of 30 years, then you will have contributed $78,000. But the real power is in the compounding, and the continued growth of your portfolio each year.
You don't need to swing for the fences, either. The S&P 500's long-run average of 10% per year is a strong enough return that can result in significant growth. At that rate of growth, an investment would double in value in a little over seven years, and would triple in value in less than 12 years.
The chart below shows what your portfolio balance would be worth over the next 30 years, assuming that you invested $50 a week, and that you averaged a 10% annual return.
Chart by author.
Here's a breakdown of those results at five-year intervals:
| Year | Ending Balance |
|---|---|
| 5 | $16,879 |
| 10 | $44,693 |
| 15 | $90,530 |
| 20 | $166,066 |
| 25 | $290,543 |
| 30 | $495,673 |
The bigger payoffs start showing up after year 15, when your portfolio hits six figures. The larger your balance gets, and the more time you can leave your money invested, the more you benefit from the power of compound growth. From year 20 to year 25, your balance, for instance, would rise by more than $124,000. And naturally, the more that you can afford to invest, the greater the gains you can achieve in the long run.
Finding quality stocks to invest in doesn't have to be difficult
Choosing what to invest in may be an intimidating prospect when it's your retirement at stake and you're looking for assets you can hang on to for decades. You want to balance both safety and growth. But the reality is that it doesn't need to be complicated.
Take, for example, a couple of strong growth stocks with solid financials -- Alphabet (GOOG 0.56%) (GOOGL 0.66%) and Johnson & Johnson (JNJ 4.56%). Over the years, both have averaged decent revenue growth rates.
GOOG Revenue (Annual YoY Growth) data by YCharts.
Johnson & Johnson is in healthcare, and it's a bit of a safer, less volatile investment than Alphabet, but it has been able to continually find ways to grow. And it should perform better in the future now that it has spun off its consumer health business so that it can focus fully on higher-growth segments such as pharmaceuticals and medical devices.
Alphabet, meanwhile, should do better under stronger economic conditions and in an improved ad market. It has a robust advertising business with YouTube and Google attracting lots of eyeballs, and it's also a dominant player in cellphones with its Android operating system.
As these businesses get growing at higher rates, that should boost their bottom lines as their operating margins have normally been above 20%.
GOOG Operating Margin (TTM) data by YCharts.
You would certainly want more than just a couple of companies to invest in, but the point is that finding quality stocks to hold doesn't have to be difficult.
Picking investments isn't the hard part -- investing consistently is
Alphabet and Johnson & Johnson are easy stocks to pick for your portfolio. They are strong businesses with excellent fundamentals. They're also leaders within their respective industries. Finding those kinds of stocks isn't difficult. And if you're unsure about picking individual stocks, a perfectly good alternative is to buy a low-fee exchange-traded fund (ETF) that tracks the S&P 500. That provides easy diversification, and more or less assures that you will just about match the market each year.
Deciding what to put in your portfolio isn't the hard part. What's difficult and requires discipline is consistently investing that $50 (or whatever the amount you chose) each and every week, and staying committed to the strategy. If you do that and steer clear of risky investments, then there's an excellent chance you'll achieve some significant returns on your investments over the long run.
