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    • You can have a million portfolio with as little as a day.
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    You can have a $1 million portfolio with as little as $10 a day.

    Harry Posted on

    Saving little by little can lead to huge gains in the future, thanks to compounding.

    David Jagielski
    | Colorful Fool

    You may think that trying to grow your portfolio to $1 million or more is unachievable. But if you’re aiming for small gains and savings, this becomes a much more plausible scenario. Eating out less, switching utility or cell phone providers, or buying private label products instead of big brands are some ways to find steadily increasing savings.

    Saving and investing $10 a day can be enough to lead to a portfolio that eventually reaches at least $1 million. Here’s how this could work.

    Saving $10 a day is the same as saving $3,650 a year

    When you consider that you have to save and invest $3,650 a year, that amount may seem difficult, especially in the midst of inflation. But if you break it down into smaller chunks and aim to save $300 a month or $10 a day, it can be much more achievable.

    IThis also reveals how costly seemingly innocent and modest daily expenses can be. Depending on how much you spend on coffee or eating out each day, avoiding some of those costs or turning to cheaper options could be enough to help you achieve that much savings.

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    And if you can save $3,650 a year and do so over the long term, then you’ll be well on your way to building a strong retirement fund. After saving this much for 20 years, you will have put aside $73,000. And after 30 years the total amount will be approximately $110,000.

    That’s not even close to $1 million, but that’s why investing in those savings can make a huge difference.

    The best Vanguard fund can help you achieve market-beating returns

    If you can save $10 a day or about $300 a month, you’re better off putting that money back to work right away. This means putting your savings into an exchange-traded fund (ETF), which can help you grow without risking too much. ETFs offer good diversification and can help you achieve great returns over the long term.

    expense ratio

    The fund has achieved total returns (including dividend payments) of over 900% over the last 20 years, far outperforming funds ever. S&P 500.

    VUG Total Return Level data Y Charts

    Investing in a Vanguard fund for 30 years can result in a portfolio worth over $1 million

    The Vanguard ETF’s roughly 920% return over the last two decades translates into a compound annual growth rate (CAGR) of approximately 12.3% on average. By comparison, the S&P 500 has an average CAGR of 10.7%.

    Assuming these rates stay the same over the long term, here’s how a $10 per day or $300 per month investment in a Vanguard fund would grow over the years and how that compares to mirroring the S&P 500.

    Calculations by author.

    Although it may seem like a modest difference in growth rates, the difference in balances may turn out to be significant over a very long period. That’s why investing in the growth-focused Vanguard fund is especially powerful. Its potential to continue outperforming the S&P 500 could make it an ideal place to regularly allocate your savings.

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    However, it should not be forgotten that future returns never guaranteed and they will likely differ from the above estimates. But by investing in growth stocks, you can give yourself a great chance of success in outperforming the market over the long term.

    John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a board member of The Motley Fool. David Jagielski It has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Nvidia, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool has a feature disclosure policy.

    The Motley Fool is a USA TODAY content partner providing financial news, analysis and commentary designed to help people take control of their financial lives. Content is produced independently of USA TODAY.

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    Harry
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