One of the most proven methods to accumulate wealth is through regular monthly investing – you put a fixed amount of money into your investments each month, and repeat, year after year, increasing the amount when possible.
This is an excellent way to create meaningful wealth, but it’s important to understand that results can take time to materialise.
The chart below shows how a monthly investment of $1,000 into the S&P 500 over the past 25 years would have grown. It also illustrates how the same monthly contribution would have evolved in a 60% stock / 40% bond portfolio (“60/40 Benchmark”):
It took more than a decade before either portfolio displayed any significant growth. However, without that foundation of consistent contributions, the compound growth seen in the later years would not have occurred.
Why should you care?
Wealth isn’t built overnight, it takes patience, consistency, and commitment over a prolonged period.
The first few years are purely about laying a solid foundation of contributions. You’re unlikely to see substantial growth in those early years, so keep your expectations in check.
Gradually, as time passes, compounding will begin to take effect, and investment growth will start to kick in.
Investing rewards those who stay the course. Trust in the process, stay committed, and maintain consistent contributions throughout. When the cumulative effects of compounding kick in, the results can be spectacular.
