You can have a $1 million portfolio with just $10 a day

Saving little by little can add up to monstrous future returns through compounding.

David Yagelskyi
| A motley fool

You might think that trying to grow your portfolio to $1 million or more is out of reach. But if you’re aiming for small wins and savings, this becomes a much more plausible scenario. Eating out less, changing your utility or mobile provider, or buying private label products instead of big name brands are some of the ways you can achieve extra savings on a regular basis.

Just saving and investing $10 a day can be enough to eventually build a portfolio that grows to at least $1 million. Here’s how it can work.

Saving $10 a day is the same as saving $3,650 a year

If you were thinking about saving and investing $3,650 a year, that amount might seem difficult, especially with inflation. But if you break it down into smaller parts and aim to save $300 a month or $10 a day, it can be much more achievable.

It also shows how expensive these seemingly innocent and modest everyday expenses can be. Depending on how much you spend each day on coffee or eating out, avoiding some of those costs or switching to cheaper options could be enough to help you achieve that much savings.

And if you can save $3,650 a year and do so over a long period of time, then you could be on your way to building a strong retirement fund. After 20 years of saving that amount, you’ll have $73,000. And after 30 years, the total amount will be almost $110,000.

It’s far from $1 million, but here’s why investing those savings can make a huge difference.

The best Vanguard fund can help you earn market-beating returns

If you can save $10 a day or about $300 a month, you’d be better off using that money right away. That means putting it in an exchange-traded fund (ETF) that will help grow your savings without exposing them to much risk. ETFs offer good diversification and can allow you to make big long-term gains.

Over the past 20 years, the fund’s total return (including dividend payments) has been more than 900% and has significantly exceeded S&P 500.

VUG’s overall profit level data on YCharts

Investing in a Vanguard fund for 30 years can result in a portfolio worth more than $1 million

The Vanguard ETF’s roughly 920% return over the past two decades averages a compound annual growth rate (CAGR) of about 12.3%. By comparison, the S&P 500 had an average CAGR of about 10.7%.

Assuming these rates hold over the long term, here’s how a $10-a-day or $300-a-month investment in the Vanguard fund would grow over the years, and how it would compare to mirroring the S&P 500.

Author’s calculations.

While this may seem like a modest difference in growth rates, the difference in balance sheets can be significant over a very long period of time. That’s why investing in Vanguard’s growth-oriented fund can be particularly effective. The potential for it to continue to outperform the S&P 500 could make it an ideal place to put your savings on a regular basis.

Bitcoin and gold profit, investors expect the market after the election

With the election less than a week away, the cryptocurrency market is making significant gains, with Bitcoin reaching a high point.

Straight Arrow News

However, it is important to remember that there are future profits never guarantees and that they are likely to differ from the above estimates. But by investing in growth stocks, you can give yourself a great chance of outperforming the market over the long term.

John McKee, former CEO of Whole Foods Market, an Amazon subsidiary, serves on The Motley Fool’s board of directors. David Yagelskyi has no position in any of the stocks mentioned. The Motley Fool positions and recommends Amazon, Nvidia and Vanguard Index Funds-Vanguard Growth ETF. A motley fool has a disclosure policy.

The Motley Fool is a content partner of USA TODAY that offers financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

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