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Real-World Numbers: Investing $850 a Month Turned Into $200,000 Over 10 Years (2022 Edition)

Instead of focusing on the current hot thing, how about stepping back and taking the longer view? How would a steady investor have done over the last decade? Most successful savers invest money each year over a long period of time.

Target date funds. The Vanguard Target Retirement 2045 Fund is an all-in-one fund that is low-cost, globally-diversified, and available both inside many employer retirement plans and to anyone that funds an IRA. When you are young (up until age 40 for those retiring at 65), this fund holds 90% stocks and 10% bonds. It is a solid default choice in a world of mediocre, overpriced options. This is also a good benchmark for others that use low-cost index funds.

The power of consistent, tax-advantaged investing. For the last decade, the maximum allowable annual contribution to a Traditional or Roth IRA has been roughly $5,000 per person. The maximum allowable annual contribution for a 401k, 403b, or TSP plan has been over $10,000 per person. If you have a household income of $67,000, then $10,000 is right at the 15% savings rate mark. Therefore, I’m going to use $10,000 as a benchmark amount. This round number also makes it easy to multiply the results as needed to match your own situation. Save $5,000 a year? Halve the result. Save $20,000 a year? Double the numbers, and so on.

The real-world payoff from a decade of saving $833 a month. What would have happened if you put $10,000 a year into the Vanguard Target Retirement 2045 Fund, every year, for the past 10 years? With the interactive tools at Morningstar and a Google spreadsheet, we get this:

Investing $10,000 every year ($833 a month, or $384 per bi-weekly paycheck) for the last decade would have resulted in a total balance of $196,000. Bump that up to $850 a month, and you’d be sitting on $200,000 right now, broken up into $102,000 in contribution and $98,000 in investment gains.

What would have happened if you extended that to the past 15 years instead? Investing $10,000 every year for the last decade and a half would have resulted in a total balance of $353,000. That breaks down to $150k in contributions + $203k investment growth. Your gains are now officially more than what you initially invested.

Real-world path to becoming a 401(k) millionaire. Not theoretical numbers from a calculator! Are you a dual-income household that can put away more? If you each invested $14,150 a year ($28,300 total for both) for the last 15 years, you would have a million dollars. That means starting at age 22 and ending at 37, or starting at 25 and ending at 40.

It gets even better if you started early. There is a popular example of the power of compound interest that shows how someone who started saving at age 25, saves and invests for 10 years but then stops and never saves a penny again still beats someone who starts saving at 35 and keeps on saving for 30 years. Acorns provides a nice illustration:

Once you have that initial momentum, it just keeps going.

Timing still matters, but not as much as you might think due to the dollar-cost averaging and longer time horizon. Yes, the last decade has been a great run for US stock markets. But Vanguard Target funds also own a lot of international stocks, which haven’t been nearly as hot and have maintained lower valuations. Diversification means you aren’t 100% in the hot thing, but your bases are covered if the hot things goes cold. Here are my previous “saving for a decade” posts:

Work on improving your career skills (or start your own business), save a big chunk of your income, and then invest it in productive assets. Keep calm and repeat. The only “secret” here is consistency and starting as early as you can. (The best time is always yesterday. The second best time is today.) We have maxed out both IRA and the 401k salary deferral limits nearly every year since 2004. We are fortunate in many ways, but we received no inheritance and no house downpayment assistance. We are not super-skilled stock pickers or Bitcoin early adopters. You can still build serious wealth with something as accessible and boring as the Vanguard Target Retirement fund (or a simple collection of low-cost index funds).

Free At-Home COVID-19 Tests via US Postal Service

You can now start ordering your free at-home COVID tests at the US Postal Service website. Currently, get four individual rapid antigen COVID-19 tests per residential address. Shipping is free.

Limit of one order per residential address
One order includes 4 individual rapid antigen COVID-19 tests
Orders will ship free starting in late January

Current Banking App Review: $50+ Bonus, 4.00% APY on $2k/$6k

Current is part of the new wave of fintech apps that partner with a traditional bank. In this case, banking services are provided by Choice Financial Group, member FDIC. Current reminds me a lot of the Chime app, with its quick sign-up process, … [Read the rest]

Top 10 Best Credit Card Bonus Offers – January 2022 (Updated)

Updated and checked January 2022. That space in your wallet or purse is valuable, and you should be the one to get that value. By being smart and picky, you can find offers worth $500+ for a single card, all to encourage you to apply and try it out. … [Read the rest]

Top 10 Best Small Business Credit Card Bonus Offers – January 2022

Updated January 2022. Do you have small business income or work as an independent contractor? Freelance, Uber/Lyft, Amazon, eBay, Etsy, Airbnb? A small business credit card separates your personal and business expenses and can build up your … [Read the rest]

United Business Card Review: 150,000 Bonus United Miles Offer

New increased 150k bonus miles offer. The UnitedSM Business Card offers unique perks for regular United customers including free checked bags and expanded award seat availability for redeeming miles. Here are the highlights: Earn up to … [Read the rest]

Big List of Free Consumer Data Reports 2022: Check Your Credit, Banking, Rental History, Insurance, and Employment Data

Updated for 2022. Since these are available every 12 months, it is a good idea to check these near or around the same time each year. A lot of companies make their money by collecting and selling data - your personal data. It can be critical to … [Read the rest]

Health Insurance Required to Cover Free At-Home COVID Tests Starting 1/15

If you've been facing the prospect of spending hundreds of dollars on at-home COVID tests so that you and/or your kids can go back to work/school after an exposure event, please note that starting Saturday, January 15th, health insurance companies … [Read the rest]

Citi Premier Card Review – 60,000 ThankYou Points (Worth $600 in Gift Cards and More)

The Citi Premier Card is a re-structured rewards credit card offering 60,000 bonus points (redeemable $600 in gift cards at Here are the highlights: 60,000 bonus ThankYou points after $4,000 in purchases in the first 3 months 3X … [Read the rest]

Chase Freedom Flex Review: $200 Bonus, 5% Rotating Categories, 3% Back on Dining Out, No Annual Fee

The Chase Freedom Flex Card is the new 5% cash back rotating category card for Chase, including the notable addition of 3% cash back on dining out and drugstore purchases. All of the popular features from the old Freedom remain as well: Up to 5% … [Read the rest]

Chase Freedom Unlimited Review – 1.5% Flat Cash Back + New Cardholder 1.5% Cash Back Bonus

The Chase Freedom Unlimited Card is a no-annual-fee rewards card which earns a flat 1.5% cash back on all purchases (or a possibly more valuable 1.5 Ultimate Rewards points per dollar spent). This is a different card from the new Chase Freedom Flex, … [Read the rest]

PSA: Ask For Extension/Credit on Expired Free Hotel Night Certificates

Many hotel rewards programs offer free night and upgrade certificates as a perk, and many of them were set to expire on December 31st. However, many programs are offering a courtesy extension and/or points credit. Some may have quietly extended … [Read the rest]