It's easy to write off today's stock market as a bore — the S&P 500 is still down 6.6% from a year ago. But don't let that talk you out of joining the market's long-term moneymaking power.
Just investing a dollar a day in the past 20 years would be worth $12,688 now. That means you would have more than doubled your cash outlay of $5,000 despite the market's ups and downs during that time. And that's just your gain essentially investing pocket change. Putting a more substantial amount in S&P 500 would have paid off handsomely, even though the market seems like it's going nowhere.
And it's important to know how much regular investing can pay off, especially as some pros fear the market's sideways move might continue. "We think this year is largely going to be spent in a range that has seen the S&P 500 trade between roughly 3,600 on the downside and 4,300 on the upside since late April 2022," said Scott Wren, Senior Global Market Strategist at Wells Fargo.
Maybe so. But big money can still be made long term.
Investors Mustering Strength To Invest
Given the huge moneymaking power of the S&P 500, why wouldn't people invest? Still, investors are still nervous about putting money in the seemingly do-nothing S&P 500.
In April, 24% of Americans said they were taking money out of stocks and investments, up from just 18% that were doing so in December, says an IBD-TIPP poll conducted in late March. And only 33% of Americans were looking at new investments, down from 34% when asked in late February.
Meanwhile, only 46% of Americans were bullish on stocks, down from 51% in March. And the number of bearish Americans is up to 21% in April's poll, up from 19% in March. But that's at least an improvement from last year. Nearly 30% of Americans polled about the future of stocks in late December were bearish.
"Investors' expectations about growth have been on an upswing, climbing from troughs in June 2022," says Vanguard. "Investors' upbeat assessment of the prospects for growth echoed stronger economic indicators, including the unemployment rate, which hit a 54-year low," said Xiao Xu, an analyst in Vanguard Investment Strategy Group.
Turning $1 A Day Into Thousands
Keep in mind the huge gains from investing just a dollar a day are just a starting point. Much bigger gains aren't just possible, but likely.
The S&P 500 faced numerous challenges in the past 20 years, including a serious financial crisis in 2008-2009, a pandemic and attack on the White House. And keep in mind, too, the S&P 500 is a diversified basket of stocks owning the dogs, not just the winners in the S&P 500. And it owns all the sectors, not just the leading ones.
But that's the real magic, too. It doesn't take much to turn the S&P 500 into a source of wealth. In fact, if you'd up your daily contribution to just $10 a day, you would have had $126,888 in 20 years. That's a gain of more than $76,000 on a cash outlay of a $50,320.
And $100 a day? You'd be a millionaire in 20 years, sitting on nearly $1.3 million.
So you could lament the fact you didn't start investing in the S&P 500 two decades ago. Or you could sit on your hands, figuring you'll wait for a better time to invest. Or, you could just plunk down a dollar a day and wait for your big payoff.
Just A Dollar A Day Pays Off
How much you'd have now if you invested daily for 20 years
| Daily investment | Ending value |
|---|---|
| $1 | $12,688 |
| $5 | $63,444 |
| $10 | $126,888 |
| $20 | $253,756 |
| $50 | $634,439 |
| $100 | $1,268,777 |
Sources: S&P Global Market Intelligence, IBD
Follow Matt Krantz on Twitter @mattkrantz
