If you can save and invest $500 per month, you are in the elite class of America. Sadly, I am being completely serious.
Most Americans cannot save $500 over the course of a year or even a decade. America is a tough place to save because everything costs.
If you own a home or have a family, you understand why I say these things. Still, we persist and keep saving and investing for the future.
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Time to build wealth. If you want to retire early, you must save at least 50% of your income. However, with $500/month, we can start making ourselves super comfortable.
Here is a list of investments we will make with $500 per month: high-yield savings, Series “I” Bonds, Series “EE” Bonds, Fundrise, Dividend Growth Investing, and Income Investing.
Savings earn money now. It’s an excellent time to be a saver; however, we cannot become complacent. Although our high-yield savings account earns 3.6% interest, inflation is over 6%.
Therefore, we still need to focus on growing our passive income. We allow too much of our cash to sit in an HYSA. Once we have $1,000 in our HYSA, we can continue to invest $100 per month.
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Savings bonds to the rescue. Series “I” Bonds have been all the rage since inflation hit in 2021. However, as inflation slows, they will return to boring investments.
We will mix it up and add Series “EE” bonds to our portfolio. The government guarantees to double our Series “EE” savings bonds in 20 years. By that math, it gives us an average of 3.6% annually.
The bad part is that they don’t earn much interest over the 20 years; the government is betting against you. Still, a no-risk 3.6% return is pretty darn good.
We will invest $50 per month in each of these savings bonds. Series “I” Bonds will give us the power of compounding, while “EE” bonds will give us a nice cash flow in 20 years.
USDC vs. Saving Bonds vs. Treasuries
Build an income with Fundrise. There are few places to earn interest and dividends outside the stock market or Treasuries.
One of the most accessible ways is to invest in the Real Estate Investment Trust Fundrise. I have been investing with Fundrise (affiliate) since September 2019.
My portfolio focuses on dividends over capital gains. They pay me quarterly dividends in January, April, July, and October. By investing $100 monthly, we can build up a nice stream of dividend income that we reinvest or spend.
Build a nest egg with Dividend Growth investing. We will invest $100 per month into DGI stocks. We can do this either via STASH or M1 Finance.
STASH (affiliate) makes it easy to invest in individual stocks. For example, I can easily invest $5 per week into five different stocks: Total Stock Market (VTI), Ares Capital (ARCC), Altria (MO), AT&T (T), and AGNC (AGNC).
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M1 Finance (affiliate) allows us to add even more stocks into one pie. Every month we can sprinkle the $100 across the various stocks. M1 Finance will automatically find the stocks at the best sales price.
I prefer STASH for this amount of money. It gives you much more control. Once you build up a specific stock, say ARCC, you can stop investing and swap it with another.
Your investment in ARCC will continue to grow, and you can reinvest dividends. With M1 Finance, you can only replace your stocks inside the pie.
For example, I cannot replace ARCC with Owl Rock Capital (ORCC) while keeping ARCC. ARCC would go away. I do not care for this investing technique.
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My favorite is Income Investing. My favorite type of investing is income investing. We will spend $100 per month on high-yield products.
M1 Finance is the best place for income investing with this amount of money. With income investing, we do not get too attached to a particular closed-end fund or preferred share.
I would build a portfolio of five monthly paying securities, for example, PIMCO Funds (PDO, PDI), Eagle Point Credit (ECC), US Preferred Stock (PFFA), and Infrastructure Fund (UTF).
Caution: These funds use leverage and will struggle as interest rates change. Avoid this category if you cannot stand seeing your investments in the red.
The best way to think about Income investing is like your primary residence. Your house value changes daily; however, you do not care.
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With income investing, you must focus on their income, not the daily price. I love income investing because I am creating a bigger monthly paycheck—it’s very addicting.
Putting it all together. We put together a solid, versatile portfolio of saving and investing products.
We grow our wealth monthly by saving in our HYSA and savings bonds. We also are investing in real estate via Fundrise.
We are investing in the American economy via DGI stocks. Finally, we are building a paycheck with our income-investing portfolio.
From Zero to Zeroes
Keeping up with your portfolio. It may not seem like it, but you are starting something quite powerful in your life: compounding knowledge.
The more you see the results of your actions, the more you will want to learn more. My portfolio started just like this one, with even less monthly money available.
Today, my dividends produce $1,500/month that I can reinvest or spend. Seeing the results of your savings and investing is a great feeling.
Pay Down Debt or Start Investing 2
However, seeing some incredible numbers in your accounts may take a couple of years. Keep at it, and it will pay off in the long run.
Conclusion. Welcome to the world of saving and investing. Most people will never get to this point in their lives.
It takes a lot of foresight to continue to invest when the world wants you to spend. I started my saving and investing journey four years ago, in July 2019. I have come a long way.
I am still growing my numbers every month, just like you. However, you can see the results I achieved over the last four years. You can do even better. Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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