Twelve deposits of $200 into a stock index fund averaging 8% a year leave you with about $2,490, barely more than the $2,400 you put in. Keep going and it’s about $36,600 after ten years and $117,800 after twenty, and by then roughly $70,000 of that balance is growth rather than your own money. Investing is slow for most of the first decade and then speeds up. The speed-up comes from the size of the balance itself.
Every figure below assumes a steady 8% return compounded monthly, with deposits at the end of each month. Real markets don’t move in a straight line, so treat these as the shape of the curve rather than a forecast. You can rerun any of them with the SEC’s free compound interest calculator on Investor.gov.
Why the first few years feel like nothing is happening
An 8% gain on $1,000 is $80. That’s a nice dinner, and it doesn’t change anybody’s life. In year one of the $200-a-month plan, the average balance is only about $1,200, so the whole year’s growth comes to around $90. Most people look at that number, compare it to what they could have spent the $2,400 on, and wonder why they bothered.
What changes is the base the return is working on. This is how much the account grew from returns alone in a few sample years, separate from the $2,400 you put in each year:
- Year 1: about $90 of growth
- Year 7: about $1,620
- Year 10: about $2,700, the first year growth beats your deposits
- Year 20: about $8,900, more than three and a half times your deposits
That crossover around year ten is when investing starts to feel fast. Between years five and ten the account adds about $21,900. Between years ten and twenty it adds about $81,200, even though you deposited exactly the same $2,400 a year the whole time.
How much do different monthly amounts grow?
The return gets the attention, but in the early years the deposit does more of the work. Doubling a $100 monthly contribution to $200 doubles the ending balance. No realistic change in return does that. The table shows three monthly amounts at 8%, with 6% in parentheses for a more cautious plan.
| Monthly deposit | After 10 years | After 20 years | After 30 years |
|---|---|---|---|
| $100 | $18,300 ($16,400) | $58,900 ($46,200) | $149,000 ($100,500) |
| $200 | $36,600 ($32,800) | $117,800 ($92,400) | $298,100 ($200,900) |
| $500 | $91,500 ($81,900) | $294,500 ($231,000) | $745,200 ($502,300) |
Look at the $200 row over 30 years. You put in $72,000. At 8% you end with about $298,100, and at 6% about $200,900. Two percentage points of return made a $97,000 difference, which is why the return assumption matters a lot over three decades and very little over three years.
Is 8% a fair assumption?
It’s on the cautious side of history, before inflation. NYU professor Aswath Damodaran’s historical returns data shows the S&P 500 with dividends reinvested compounding at about 10% a year from 1928 through 2025. The single years are all over the place, though. The index returned 31.2% in 2019 and 26.1% in 2023, and lost 36.6% in 2008 and 18.0% in 2022.
The stretch that tests people is a run of bad years, and 2000 through 2002 is the one to remember. Using those same annual returns, $10,000 invested at the start of 2000 was worth about $6,260 at the end of 2002, after three straight losing years. Someone contributing monthly through that period was buying shares cheaply the whole way down, which is the real argument for dollar cost averaging. The SEC describes it as buying more shares when prices are low and fewer when they’re high. Your balance still falls in a year like 2002, but you keep buying.
Planning on 6% to 8% leaves room for fees, for inflation and for a bad decade landing right before you need the money.
The Rule of 72
Divide 72 by the annual return and you get a rough count of years for a lump sum to double. It’s a shortcut, and at these rates a close one. The exact doubling time at 8% is 9.0 years, and at 6% it’s 11.9.
Those few points add up fast on a single deposit. Leave $10,000 alone for 18 years at 8% and it doubles twice, to about $40,000. At 6% the same $10,000 gets to about $28,500.
What starting ten years later costs
Picture two people who each invest $200 a month at 8% until 65. One starts at 25 and deposits $96,000 over 40 years. The other starts at 35 and deposits $72,000 over 30 years. The early starter ends with about $698,200. The late starter ends with about $298,100.
Ten years of head start cost only $24,000 in extra deposits and produced about $400,000 more at the finish. To catch up, the 35-year-old would need to put in about $468 a month for all 30 years, well over double. That’s the practical case for starting with a small amount now rather than waiting until you can afford a bigger one. If you’re already the late starter, the fix is a higher contribution and lower costs. Swinging for bigger returns with a concentrated bet tends to make it worse.
Fees and inflation, the two quiet drags
Every return above is nominal. If the portfolio earns 8% in a year when prices rise 3%, your buying power grew about 5%, and at 5% buying power takes about 14 years to double instead of 9. The plan still works. Just remember the $298,100 at year 30 will buy less than $298,100 buys today, and judge it that way.
Fees are the part you control. A fund’s expense ratio comes out of the fund’s assets every year, so you never see a bill for it; it just shows up as a lower return. On the $200-a-month plan, a 1% annual fee turns an 8% gross return into 7%, and the 30-year balance drops from about $298,100 to about $244,000. That’s roughly $54,000 gone, on deposits of $72,000. Many broad index funds charge a small fraction of 1%, so check the expense ratio on the fund’s fact sheet before you buy.
Can more risk make it grow faster?
For a while, sometimes. A handful of stocks, options or crypto can double in a year, and they can also lose half, which on the math above can cost you the equivalent of several years of deposits. What reliably helps is dull. Raise the monthly amount when your pay goes up and automate the transfer so you don’t skip months. The rest is mostly about not selling during a year like 2008 or 2022.
Setting it up this month
Pick a monthly amount you can keep paying in a bad month, set up an automatic transfer on payday, and buy a low-cost broad index fund. If you have earned income, consider doing it inside a Roth IRA, where the growth isn’t taxed at withdrawal if you follow the rules. Then plug your own numbers into the Investor.gov calculator at 6% and 8% so you know the range you’re working with, and look again in five years rather than five weeks.
Related reading
- How to Start Investing With $100
- Can You Contribute to a Roth IRA and a 401(k) in the Same Year?
- How Does a High-Yield Savings Account Work?
The balances above assume a steady return that real markets never deliver, and past S&P 500 results through 2025 don’t predict future ones.
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