Since 1926, the stocks of large companies have produced an average annual return of about 10%. (Remember, that includes such lows as the Great Depression, the stock slide that followed the September 11 terrorist attacks and the financial crisis of 2008.) If we assume a long-term annual return of 8%, we’ll need to add $382 a month to the initial $5,000 to reach a quarter-of-a-million dollar goal in 20 years. If we can earn 10% annually, $279 a month will do the job. These examples are simplified, of course, because they don’t take taxes or broker commissions into account. But the point is simple, too: Making investing a habit is a key to making investing a success.
Chris Bryant is an American financial advisor.