Turn $100 a Month Into a Giant Nest Egg by Doing This One Thing

The more money you bring into retirement, the more comfortable your senior years might be. But finding the money to save and invest is easier said than done.

It's hard to carve out funds for your IRA or 401(k) when life's many expenses continue to get in the way. And let's not forget our friend inflation, the stubborn beast that's been making it even more difficult for Americans to meet their savings goals in recent years.

The good news, though, is that you don't necessarily need to fund your retirement plan to the tune of hundreds of dollars every month to make a big impact. If you're able to do that, that's great! But if not, you should take comfort in the fact that contributing just $100 a month to your nest egg over time could really leave you with a lot of money -- provided, of course, that you invest it strategically.

A good investment choice to fall back on

The money you put into your IRA or 401(k) shouldn't be left to sit in cash. Rather, you should aim to invest it so that over time, your balance is able to grow.

Now figuring how to invest the money in your brokerage account can be challenging. But there's actually a pretty easy approach you can take, and it's to simply put your money into the S&P 500 index.

The S&P 500 index consists of the 500 largest publicly traded companies. And an easy way to to invest in the entire index is to buy shares of an S&P 500 index fund.

Index funds are passively managed. That's important, because it means you're generally not going to be looking at expensive fees the way you might be when buying shares of mutual funds. Those fees can eat away at your returns, so it's best to minimize them as much as possible.

Index funds, meanwhile, simply aim to match the performance of the indexes they're tied to. So an S&P 500 index fund will have the goal of delivering comparable returns to the index itself. And because you're investing in an index fund, you don't have to spend the time researching different stocks individually. That could take a lot of the pressure off.

Results you might be more than happy with

So just how far can you get investing $100 a month for your retirement over time? Well, over the past 50 years, the S&P 500 has generated an average annual 10% return. That accounts for both good years and bad. So if you invest $100 a month in the S&P 500 over 47 years, you might end up with a very impressive nest egg worth a little more than $1 million. Try an investment calculator to see what kind of return you might enjoy, based on how much you invest and how long your timeline is.

Of course, you should know that some individual stocks have a history of outperforming the S&P 500. So it's possible to enjoy an average yearly return on your money that's higher than 10%. But if you're happy with a return of that size and want to minimize your legwork, falling back on an S&P 500 index is a really good route to take.