Become a Millionaire…With 500 Bucks a Month

“Where are you going with this?” My brother said.

My brother, Daniel, who’s seven years younger than I am, told me the other day that he doesn’t feel like investing because he can’t invest a lot of money. So I said, let’s do some calculations. I’ll show that you can become a millionaire by investing small amounts of money.

My goal is to destroy one of the biggest myths of wealth-building which is that you can only get rich by investing big lumps of money Here’s where it comes from. Let’s say you want to start investing in an S&P 500 index fund. It’s a relatively low-risk way of getting started.

And you put in $1000 of your money and you wait a year. And you see something like 8% returns, which is about the average for the past 30 years. And you think, “$80? That’s all? What am I supposed to do with that?”

How about adding more money? That’s the thing I never understood about investing when I started. The goal of investing is not to generate short-term cash — that’s what your career or business does.

The goal of investing is to allocate your capital to assets that usually appreciate over time: Stocks, real estate, land, and so forth. But that appreciation is often underwhelming in the short term.