We all come into some extra money from time to time. Whether it’s from a birthday card from a relative, some cash found in the pocket of an old jacket, or even just literally found on the street, that extra money can be put to good use.
In today’s age, it’s easy to even take that money and invest it. While most say you need thousands to start investing, even with as little as $50 you can start to get yourself on a financial track to wealth.
Of course, even $50 that grows quickly will still only be worth a few hundred dollars after a few decades.
But what if you could take that small sum and make a regular investment contribution to an index fund? $50 a month, for five years straight, or 60 months, will mean a total investment of $3,000.
After just five years, the power of investing will already create a total portfolio over $3,700 assuming an 8 percent return.
Here’s the fun part: Say you keep that money invested for another 15 years with ZERO additional contributions. Getting that 8 percent average annual return will grow your balance to over $11,800.
At 25 years, it’s over $25,400. Not bad for a total contribution of $3,000 spread over five years.
Of course, that’s just one way to invest an extra $50. That kind of extra money could be put into more aggressive investments than just an index fund, especially if you’re already contributing to one. A mere $50 may not sound like much, but when used to buy an option contract trading at $0.50, an investor can potentially double or triple their money.
Of course, an option trade can also get completely wiped out, but when you have money that’s been “found” in the first place, the feeling of a loss is a lot lower than a loss coming from previously committed money in an investment account.
Those are just two ways to deal with found money. That’s the power—and importance—of growing your wealth by adding small sums at a time. And it goes to show that the extra cash in your pocket may be more valuable than you think.