How to Invest 500 Dollars Wisely (A 3-Step Plan for Normal Folks)

by | Last Updated: April 24, 2021

Can I ask you a question?

Do you remember all the amazing things you learned in school?

Yes, I know that you’re probably light years beyond your teens. But still, it’s hard to forget the valuable knowledge you acquired.

For example: let’s say you were given the function f(x) = x2 + 7x – 12.

You’d easily be able to figure out the answer for f(-6x + 5).

That’s some pretty useful knowledge to have eh?

And that’s not all you learned…

You can also say “good morning” in a foreign language, quote the first ten words of the Gettysburg Address, and recognize iambic pentameter in poems.

Imagine where you’d be in life without all those essential skills!

In fact, think of how great it was to learn how to invest 500 dollars so you’d become a millionaire in your 30s.

What’s that?… You don’t recall taking those personal finance classes?… Hmm, it appears you’re right. Almost no one learned that stuff in school.

Maybe it wasn’t as important as learning how the Renaissance may have sparked Christopher Columbus’ hunt for the New World.

The point I’m trying to make is: 75% of what you learned in school was 100% useless.

Sure some classes were necessary. Particularly those that would lead to careers in engineering, medicine, law, and technology.

But even then, there are many doctors who are one malpractice suit away from being broke. And some engineers, lawyers, and tech professionals have their fair share of financial problems too.

All of this can be traced back to the lack of proper financial education in schools. And the education you did receive was only focused on prepping you for corporate slavery or family life.

Now, we can debate this topic ’til the cows come home. You can even blame your parents and the government too. But that’s not going to help the $500 in your bank account that’s waiting to be invested.

So keep reading to learn why.

How to Invest 500 Dollars Wisely

There are 3 steps you can take to invest $500.

It’s a simple method that has historically produced a positive rate of return for investors. And it continues to be used today by virtually all millionaires.

Here are the steps:

  1. Make a budget to save at least $500 each month for investing
  2. Use the $500 to invest in blue chip stocks and investment grade bonds
  3. Invest consistently for at least 35 years

That’s all you need to do with this investment strategy. It’s basically using the power of compound interest to turn your $500 investment into a million dollars.

Now that you know the 3 steps, it’s time to go over each one to give you a better understanding of how it works. So let’s continue.

Understanding the 3-Step Investing Plan

Before you can put this plan into action, you need to know a few things about the steps.

This section will also address some of the concerns that will undoubtedly pop up in your head.

Saving to Invest by Budgeting

How To Save 500 A Month

This step is pretty straight forward.

Since your goal is to invest $500 every month, that means you need to save about $17 every day.

Of course you don’t have to literally save that amount every single day. As long as you manage to hit your target of $500 every month, that’s all the matters.

One of the best ways to stick to your budget is to think of yourself as someone you owe money to every month. Some people like to think of it as paying themselves a salary. But however you think about it, just remember to save that $500 or else there will be consequences.

If you adopt this mentality, it will dramatically change the way you save money and have a positive impact on your personal finances.

What are Blue Chip stocks & Investment Grade Bonds?

Blue chip stocks are stocks of well-established and properly managed companies. Examples include: Coca Cola, Microsoft, and Google.

Most blue chip stock companies have tremendously high market capitalization. They’ve been proven to be safe investments for decades. And the people who invested in these stocks have become millionaires, thanks to following a similar 3-step investment strategy.

As for investment grade bonds, don’t let the long name confuse you. These are low risk options for diversifying your investment.

A bond is simply a type of I Owe You (IOU) between a lender and borrower.

The borrower basically owes the lender a debt and is obligated to pay them interest or repay the principal at a later date, based on the terms of the bond.

When you hear the term investment grade bond, it just refers to bonds that have lower risk of the borrower’s ability to repay the lender.

Now, you might be skeptical about stocks and bonds based on the stigma around Wall Street and banks in general. And you’re not wrong for having some concerns.

However, it’s a fact that blue chip stocks have yielded an average return on investment of 10% for more than 100 years.

Similarly, investment grade bonds have yielded an average return on investment of 6% over the same time period.

Given their levels of consistency and historic track records, they are two legitimate options to invest your $500 and watch it grow over time.

In terms of investing, this portfolio of stocks and bonds would pay you an average return of 8% on your investment.

This isn’t some hypothetical number or unfounded claim. It’s based on actual investment data over the last century. And that’s something you don’t need to pay a financial advisor to tell you.

Why 35 Years?

Long Term Investing

In case you haven’t figured it out yet, this is obviously a long-term investment strategy.

You don’t need to worry about selling or what the stock market is doing on any given day. You’re in this for the long haul. You’re essentially investing your money and letting the power of compound interest work its magic.

Now I know it seems like a lot, but here’s why you’re going to keep investing $500 each month and leave your money alone for 35 years…

After all those years your investment portfolio will be worth: $1,041,293.49

To put that in perspective, here’s how much you’d make on your $500 investment in 35 years by:

Saving it and putting it in a vault or mattress: $210,500.00

Putting it in a savings account (avg. interest rates are 0.05%): $212,303.68

It goes without saying that neither of those options are worth it.

Sure, $200K is nothing to sneeze at, but would you rather have that or a million dollars?

If you’re like most people, the choice is a no brainer.

Is it Too Late to Start Investing?

Too Late To Start Investing

The simple answer is: NO.

Obviously, if you implement this 3-step strategy at the age of 20, you’ll have an advantage over someone starting in their 30s, 40s, or 50s.

And if you happen to fall into the latter age ranges, that doesn’t mean you shouldn’t invest.

Some people will read this and scoff at the idea of investing for 35 years.

You’ll hear crap like:

  • “I’ll be 65 with a million dollars and too old to enjoy it”
  • “I’ll be dead in 35 years”
  • “I want to be rich now, not when I’m old”

If you feel the same way, that’s cool. It’s your choice to have that kind of mindset.

But let’s say you’re older and you have a family, wouldn’t you like to give your kids a better life?

Or what if you’re still alive in your 80s and 90s, will your social security benefits last that long?

And let’s not start on America’s awesome healthcare system.

The point is, it’s not too late.

There’s no reason to not do something. All you’re doing is creating an excuse for not acting and 10 times out of 10 you’ll live to regret that decision at some point in life.

BTW, nobody’s forcing you to do anything. At the end of the day this is a proven method that some people will either use and others will ignore. It’s not meant to please or appeal to every human on Earth.

Can You Get Rich Faster with this Plan?

How To Get Rich Fast

Yes. It’s possible.

The example above was based on an initial investment of $500 and subsequent monthly investments of $500. And after a period of 35 years, you’d have a million dollars.

However, if you were to increase both the initial and subsequent investments to let’s say $2,500, then you’d make a million dollars in just 17 years.

Basically… the more money you invest, the greater your returns will be when it’s compounded.

The Bottom Line About Investing Wisely

As you’ve just learned, there’s actually a proven method for turning $500 into a million dollars. And it’s not based on luck, hope, thoughts and prayers, or suspect investing methods. It’s 100% real.

Why didn’t you learn this in school? Because it would disturb the principles of society and government.

Those institutions would not be able to brainwash you into becoming a consumer and corporate slave saddled by life long debt. If you knew the truth about money and personal finance, you couldn’t be exploited.

If you pick up a good finance book on investing, you’ll find methods that are similar to the 3-step investment plan. In addition to that, one of the more popular individuals to use this method is Warren Buffet.

But it’s not just for billionaires…

Even to this day, regular folks are millionaires because of this strategy. They might not be balling like a hip-hop video but that doesn’t mean they don’t live silently around you. They just have more important things to do than bragging about their wealth.

BTW, this is just one strategy for investing money wisely. There are tons of other ways you can turn a small investment into a huge sum of money.

So if you find this method boring or long-term investing isn’t your cup of tea, then by all means, find something that works for you.

Obviously this isn’t financial advice. But I can promise you one thing though…

If you’re looking for an easy way to make a lot of money fast, what you’ll find is a quick way to lose everything you own even faster.

Now, since you’re still reading this, I have a feeling that you’re not going to fall into that trap.

Sadly, the same can’t be said for most people. But there’s an easy solution for that…

If you share this post online, then other smart folks like you can get the information they need to start investing.

So go ahead and click the buttons below to start sharing this post with them now.

About Carlton F.

Most people like to brag about themselves here. Carlton just wants you to know that he co-founded this website to help you find meaningful solutions to your money problems. Cars and traveling are his passion, but otherwise, he’s a humble dude.