"Enjoy the magic of compounding returns. Even modest investments made in one's early 20s are likely to grow to staggering amounts over the course of an investment lifetime." -- John C. Bogle

That's right, you can become a millionaire over time without pulling a six-figure salary, and maybe even if you earn an average income. Here's a look at how it can happen.

Someone in an apron is standing and smiling in a commercial kitchen with his arms crossed.

Image source: Getty Images.

Modest incomes

Sure, it would be wonderful to be earning, say, $100,000 or $200,000 per year -- especially if you're married to someone with similar or greater earnings. But that's not the norm. The Bureau of Labor Statistics has reported that the median weekly earnings of full-time workers in America were $1,194, or $62,088 for the year, as of the first quarter of 2025.

If there are two people in a household earning that, we're looking at household income of $124,176. But in many cases, a household may have one full-time worker and a stay-at-home parent or a part-time worker.

As we proceed, let's imagine people or households earning between $60,000 and $100,000. And know that people with modest incomes -- such as teachers and secretaries and janitors -- can become millionaires, and that more than a few average folks have done so.

How money grows

Before delving into the nuts and bolts of compounding, it's useful to understand what's possible. So check out the table below, which shows how money can grow over time. It assumes 8% average annual growth because while the S&P 500 has averaged annual gains of close to 10% over many decades (not including inflation), how it will perform over your particular investing time frame is unknown.

Growing at 8% for

$7,200 invested annually (that's $600 per month)

$12,000 invested annually ($1,000 per month)

5 years

$45,619

$76,032

10 years

$112,648

$187,746

15 years

$211,134

$351,892

20 years

$355,845

$593,076

25 years

$568,472

$947,452

30 years

$880,890

$1,468,150

35 years

$1,339,935

$2,233,226

40 years

$2,014,423

$3,357,372

50 years

$4,461,637

$7,436,061

Data source: Calculations by author.

You can see that with enough time, it's possible to amass a million dollars or more, only socking away $600 per month -- which is less than many people's car payments.

Note that if all you can save and invest right now is just $300 or $500, it's still very much worth parking those dollars in the stock market because your earliest invested dollars are your most powerful ones. Also, there's a good chance that your income will go up over time, due to your getting raises, better jobs, or potentially a more lucrative career.

Compounding at work

So here's how compounding works. Note that "compound interest" and "compounded growth" are somewhat different things. Compound interest refers to interest-bearing accounts, where you might earn, say, 5% on your $1,000 account one year, adding $50 and bringing your account value to $1,050, and then 5% the next year, adding $52.50 for a new total of $1,102.50. So the amount your account grows by keeps increasing as your total value increases.

That also happens to be compounded growth, which stock investments can give you. For example, if your portfolio is worth $200,000 and it grows by 10%, it will add $20,000 of value and be worth $220,000. If it grows by 5% the following year, it will add $11,000 and be worth $231,000. If it grows by 15% the next year, it will gain $34,650 and become worth $265,650. That's compounding at work.

How can you take advantage of compounding?

For compounding to work its magic, there are three important factors:

  • How much money you invest, ideally regularly
  • How much time your money has to grow
  • How quickly your money grows

To get the most out of compounding, then, aim to:

  • Invest as much as you can reasonably invest, ideally regularly. Increase the amount of your investments as you're able.
  • Give your money as much time to grow as you can. If you're starting late and hoping to retire at, say, 65, consider delaying a few years to give your portfolio a little more time to grow.
  • Invest effectively. Know that it's hard to beat the stock market for long-term growth, so consider investing in one or more low-fee index funds, such as the Vanguard S&P 500 ETF.

It's possible for many of us to retire as millionaires, given enough time. We can let compound interest help us get there with our short-term savings and the compounded growth of long-term stock investing can help with the rest.