Investing money in the stock market every month can be a great way to increase the value of your portfolio over the long term. Rather than trying to time the market and wait for ideal conditions, by investing monthly and creating this routine, you no longer have to worry about deciding when to buy. Although you can buy when valuations are high, you will also buy when they are low. And so, in the long term, this trend will balance out.

Aiming to invest $200 per month can be a good amount to target, as it equates to saving $2,400 per year. This can help you build a solid nest egg. Below I’ll show you how high this type of investment could realistically grow over the years.

Investors should be careful not to set expectations too high

THE S&P500 has hit record highs this year, and while that’s great news for stock valuations, it also means that if you invest in the market today, it may be harder to earn a high return than if valuations were much cheaper. And so, even though the index reached an average of long-term return of around 10% for decades, you may want to lower your expectations if you start investing now. If for no other reason, this takes into account a certain conservatism and can ensure that you don’t set your expectations too high, which could set you up for disappointment later.

You can increase your chances of getting a better-than-expected return by investing in a good exchange-traded fund (ETF). Vanguard Growth Index Fund (VUG -2.04%) is a great option for investors. It’s low spending rate of 0.04% and a concentration on top growth stocksincluding big names like Apple, AlphabetAnd Teslacan make it a fairly safe fund to buy and hold. Over the past 10 years, here’s how it has performed relative to the broader index when looking at its total returns (which include dividends).

VUG Total Yield Level data by Y Charts

During this period, the compound annual growth rate averaged 15.8%.

It might be a little too optimistic to assume that this growth rate will continue over the long term given the current price of many stocks. Instead, let’s assume things slow down and the rate is around 8%, which is below the S&P’s long-term average. Next, I’ll look at how much your portfolio balance could grow assuming this annual rate of return.

How quickly your wallet balance can grow

Assuming you regularly invest $200 per month in the Vanguard Growth fund and it generates an annual return of 8%, here is a breakdown of what your investment in this ETF could be at the end of each decade and how it will perform. compares to a more typical 10%. annual yield.

Calculations by author. CAGR = compound annual growth rate.

As you can see, even a few percentage points can make a big difference over a long period of 30 years. But it’s important to be a little conservative, because you might be doing yourself a disservice by not expecting at least some slowdown in the markets, given how hot they’ve been in recent years.

Investing more is the surest way to accelerate your portfolio growth

If these balances aren’t high enough to motivate you to invest regularly, remember that you can put yourself in a better position in the long run by investing more money. It doesn’t have to be on a monthly basis, but perhaps every time you receive an influx of cash, for example from a tax refund or sale of an asset, you You may want to invest this money immediately. This can be a way to give your wallet a boost.

The more this balance increases, the more it will be able to grow; Every little bit counts when it comes to composition. Saving and investing more money may be the best way to ensure you end up with a higher portfolio balance in the end, rather than targeting riskier investments.