When you first start out investing, you may not have lots of spare capital to put into ASX 200 shares.
And while only investing $100 a month through platforms such as Pocket by Commonwealth Bank of Australia (ASX: CBA) may seem like it isnât going to make you rich, it is well worth sticking with it.
Thatâs because of the power of compounding. This is where you earn interest on top of interest, or returns on top of returns when it comes to ASX 200 shares.
By making regular investments over a long period of time and letting compounding work its magic, investors can build up a sizeable investment portfolio.
Investing $100 a month into ASX 200 shares
According to Fidelity, over the last three decades, the Australian share market has provided investors with a total return of approximately 9.6% per annum.
While there is certainly no guarantee that the same will happen over the next 30 years, it is worth noting that these returns are largely in line with historical share market returns on Wall Street. So, it certainly is plausible that the same could happen again over the three decades to come.
If this does indeed happen and you invest a modest $100 per month into ASX 200 shares and earn the market return, your investments would grow to be worth $100,000 after 23 years.
And if you keep going through to the 30-year mark, you will have almost doubled the value of your investment portfolio to just over $192,000.
The latter really demonstrates the power of compounding. It took 23 years to get to $100,000 but just 7.4 additional years to make your second $100,000.
And, in case youâre wondering, a further 4.2 years would be enough time for your portfolio to increase a further $100,000, ceteris paribus.
All in all, this goes to show that making even modest investments in ASX 200 shares today could snowball into something significant in time.
The post ASX 200 investors: Donât give up! How even $100 per month can grow into a $100,000 portfolio appeared first on The Motley Fool Australia.
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More reading
- ASX 200 bank stocks lift after Credit Suisse share price soars 19%
- The CBA share price is on a rollercoaster today. Is Credit Suisse to blame?
- ASX 200 bank shares are deep in the red on Thursday. Here’s why
- What are the risks of investing in term deposits instead of ASX shares?
- Down 14% in a month, should I buy the dip on CBA shares?
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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