Here's What Happens When You Invest $10 a Week Over 10 Years

If you're sitting the market out because, like a lot of people, you don't believe you have enough money to invest, I'm here to tell you that you're wrong. Most of us knew next to nothing about investing when we started taking advantage of compound interest, but we learned a little at a time. And the longer we stuck with it, the more confident we became. All that to say, where you are and what you're feeling is natural. If you're interested in investing, there are all kinds of ways to make $1.43 a day (that's $10 a week) work for you. 

Before we look at investment options, let's see what would likely happen if you were to invest $10 a week for 10 years. For the sake of this illustration, let's say your investment earns a 7% annual rate of return.

By the way: If you're wondering if 7% is a realistic rate of return, here's the average rate for several different spans of time:

One more thing about wondering if 7% is a realistic rate of return: That's a great question to ask any time you consider an investment. 

$10 a week for 10 years

Let's say you decide to tuck $10 a week under your mattress for 10 years. Since there are 520 weeks in a 10-year period, you would eventually have $5,200 to spend. However, if you invest that same $10 per week for 520 weeks, and that investment earns an average return of 7%, your savings will grow to $7,129. 

Some years, the average rate of return will be lower, and some years, it will be higher. What matters is how it does over the long term because investments are made to buy and hold. 

Just for fun, here's what would happen if you continued to invest $10 beyond the 10-year mark. 

• After 15 years of investing $10 per week, you could expect to have $12,967.
• In 20 years, that number would have grown to $21,154.
• In 25 years, that little $10 a week would be worth $32,637.
• In 30 years, you may be surprised to learn that it's worth $48,742. 

And that's just with $1.42 per day.

Options for investing

What's so great about investing is how many options you have. Here are three of them.

1. Certificate of deposit (CD)

If you're feeling a little nervous about risking any of your principal, you can buy a CD at a fixed rate from your bank or credit union. Currently, CDs are enjoying some great rates (although it would be rare to find one that hits 7%). In essence, buying a CD is like loaning your bank money and promising it can keep it for a specific amount of time. In return, your bank pays you a certain interest rate when the CD matures. 

Once time is up, you have the option of getting your principal back, plus interest. Or, you can roll it over into another CD. The majority of financial institutions require a minimum deposit of $500 or more, but here are a few that allow you to open a CD with no minimum deposit, and still pay great rates: 

2. Fractional shares

Fractional shares are like slivers of stock. Let's say you are wild about Chipotle, but at over $1,800 a share, buying an entire share is a little rich for your blood. So, instead, you buy a sliver of a share. As money permits, you can buy more slivers. In any case, as Chipotle prospers, any slivers you own increase in value. 

There's a lot to like about fractional shares. For one thing, they allow you slowly wade into the stock market, learning along the way without betting the entire farm. 

3. 401(k)

If your employer offers a 401(k) program, you're in luck. Not only are contributions made with pre-tax dollars (before taxes are withheld), but if your employer matches even a portion of your contributions it's like receiving free money. 

If this is your first time investing, the fact that your investments are professionally managed is an advantage. You can follow along online or by combing over your statements to get a sense of how the process works and begin to feel comfortable with long-term investing. 

Remember, you don't have to know everything there is to know before you invest. It's okay to start out small and learn more about investments along the way. And if you're tempted to believe that $10 a week is too little to invest, keep those two magic words in mind: compound interest.