How much will I have if I save $200 a month? Find out how much saving $200 turns into in 10, 15, 30, and 35 years at a 7% compound annual growth rate. I am not a licensed investment advisor and this article is not investment advice.
Believe it or not, $200 a month can turn into a lot of money if it is invested for decades.
Of course, it depends on how long the money is invested for and the rate of return.
But even with an average rage of return, the numbers may surprise you.
In this post, I will use a compound interest calculator to show you how much money you will have by retirement if you save $200 per month.
Let’s dive in.
How Much Will I Have If I Save $200 A Month
To get started, I will set an average rate of return and select time ranges until retirement.
To keep things simple, I will assume the $200 is invested in an S&P 500 fund and it earns an average annual return of 7%.
Regarding the time frame, I will look at 10, 15, 30, 35 year time periods. Ideally, that will provide enough of a range of time for people at different ages and time frames until retirement.
For the compound interest calculator, I will use this calculator by Get Smarter About Money.
How Much Will I Have If I Save $200 A Month (7% Compound Annual Growth Rate)
10 Years — $34,603.78
If you save $200 a month for 10 years and it compounds at a 7% rate annual, you would have $34,603.78.
Your personal contributions would have been $24,200, and the interest would have been $10,403.78.
That’s a pretty decent chunk of money for contributing such a small amount if you asked me.
15 Years — $62,772.76
If you were to continue beyond the 10 year mark up to 15 years, you would have $62,772.76.
In total, interest earned would be $26,572.76, which is more than the total contributions in the first 10 years.
At this point, the powerful impact of compound interest becomes clear.
In just 15 years of saving $200 per month, you would possess almost $63,000 at a 7% compound annual growth rate.
30 Years — $235,412.97
The long, long term is when compound interest begins to take over.
If you save $200 a month for 30 years and it compounds at 7% annually, you would have $235,412.97 saved up.
For most households, sacrificing a luxury to come up with another $200 would not be too much of a problem.
A small sacrifice now could add significantly to your ability to enjoy retirement.
What’s more is the incredible amount of interest earned in a 30 year time period.
Out of the $235,412.97 accumulated, an astounding amount of it is compound interest. $163,212.97 to be exact.
Hence why it’s important to start saving and investing as early as possible.
35 Years — $344,418.04
After 35 years of saving $200 per month, you would have a remarkable $344,418.04 at a 7% compound annual growth rate.
This is flat out amazing and shows the power of compound interest.
This proves that a small amount of savings can turn into a decent retirement.
Over $260,000 of the sum would be from interest, capital gains, or dividends.
If you are starting out your career and have 35 years until retirement, start investing now to take advantage of compound interest.
How Much Will I Have If I Save $200 A Month — Final Thoughts
In conclusion, saving $200 per month can turn into a large sum of money if it is invested for long enough at a 7% compound annual growth rate.
After 10 years, it turns into $34,603.78. In 15, $62,772.76. Furthermore, saving $200 a month turns into $235,000 to $344,000 in 30 to 35 years.
Therefore, it is completely feasible for most people to achieve a reasonable retirement by saving $250 to $500 per month.
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