If I told you that you could set your child up to be a millionaire with just $100 a month, you’d probably assume there was some kind of catch. Maybe it involves risky stock picks, timing the market, or some convoluted financial loophole. But the truth is—there’s no trick. No gimmicks. Just simple math and time.
The power of compound interest is one of the few financial principles that really does work like magic. The formula?
- Start with $1,000 invested in an S&P 500 index fund at birth.
- Contribute $100 per month until they turn 21.
- Stop investing and let it sit.
- By age 50, that money could grow to $2.6 million.
That’s it. No stock picking. No financial wizardry. Just consistency, patience, and letting time do the heavy lifting.
Does the Math Check Out?
Yes. Historically, the S&P 500 has returned about 10% per year on average. That means money in the market doesn’t just grow—it compounds.
- After 21 years, you’ll have invested $109,000.
- Left alone, that money will keep growing for decades.
- By the time they turn 50, historical returns suggest it could reach around $2.6 million—and that’s without adding another penny after age 21.
The market has its ups and downs, but over long time periods, it has always rewarded patient investors.
What About Market Crashes, Taxes, and Inflation?
Sure, there will be downturns. The stock market isn’t a straight line—it’s a rollercoaster. But over any 50-year period in history, the market has always trended upward. Every crash has eventually recovered.
Taxes? If you set this up in a custodial Roth IRA or another tax-advantaged account, the tax burden can be minimal. And even if taxes apply, they don’t erase the massive power of compounding.
Inflation? Yes, $2.6 million won’t buy as much in 50 years as it does today. But even accounting for inflation, this is still turning a modest monthly investment into a multi-million-dollar windfall.
Why Doesn’t Everyone Do This?
Because investing requires patience. The hardest part isn’t the math—it’s sticking with it. People get impatient. They try to time the market. They panic-sell during crashes. They don’t trust the process.
But if you follow this plan and leave the money alone, it works.
The Bottom Line
You don’t need to be rich to make your child rich. You don’t need a financial advisor, a hot stock tip, or a genius-level understanding of investing.
You just need time, consistency, and discipline.
Start early. Stay consistent. Let it grow.
And yes, it really is this simple.