How $200 Per Month Can Make You a Millionaire

A few hundred dollars per month is all you need to build up a mountain of savings over your working career. By dollar-cost averaging in the stock market at regular intervals, you don't need to stress about the occasional market dips.

The most important thing is to know that the stock market will fall at some point -- there's no way around it. But the long-term growth of the economy will see it rise more often than it falls. Investors who remain persistent in regularly buying shares of growing companies will build lasting wealth.

Here's how $200 per month can turn into $1 million.

Invest in the best companies

The Vanguard S&P 500 ETF (NYSEMKT: VOO) tracks the underlying performance of the S&P 500 index, the most popular broad-market benchmark. This ETF (short for exchange-traded fund ) immediately provides investors broad diversification in some of the best companies in the world, and it's all that most retirement savers will ever need to grow their money.

The fund is currently invested in 504 holdings, with the top 10 making up some 35% of the fund. Among those top 10 are six of the " Magnificent Seven ," an elite group of tech stocks of highly profitable companies with above-average growth potential. The performance of this group is largely why the index is up 18% over the past year.

For most investors just starting out, this ETF is all you need to build your savings. Over the last five years, companies in the fund have increased their earnings by an average of 17.5% annually, which has nearly doubled the value of the fund over the last five years.

But even if the fund reverts to its historical average annual return of about 10%, which goes back to 1957, a regular investment of $200 per month would grow to be worth $1 million in 38 years.

The Vanguard S&P 500 ETF has a low expense ratio of just 0.03%, meaning that it costs an investor just $0.30 for every $1,000 invested. Moreover, the minimum investment is only $1, making it very affordable for anyone to start investing in the stock market.

Why invest in growth stocks

Some investors are completely satisfied with the returns of dollar-cost averaging in an index fund. Others might want to consider supplementing an index fund with growth stocks . It's easier than it may seem to pick stocks that can outperform the S&P 500, and it can make a huge difference in your returns.

If you were deciding where to invest, say, $1,000 per month in savings, a sensible approach would be to put at least half that in an index fund. With the rest, you could dollar-cost average in a group of top growth stocks . The appeal of this approach is that you're maintaining a solid investment in a well-diversified index fund, while positioning yourself to benefit from the above-average return potential that growth stocks offer.

For example, if you had invested just $100 per month in Amazon (NASDAQ: AMZN) starting in 2010, your investment would currently be worth $100,000. The same investment in Microsoft (NASDAQ: MSFT) would have grown to $129,000 (including dividends), and $100 per month in Netflix (NASDAQ: NFLX) would be worth $178,000.

By comparison, the same $100 invested every month in the Vanguard S&P 500 ETF would currently be worth $45,000. A lot of investors try to time when to buy a growth stock and then never add to that initial investment. But it's a lot easier to decide what companies are likely to keep growing and regularly buy shares. This allows an investor to benefit from the growth of the company over many years without worrying about the short-term bumps from market volatility , or whether the stock is too expensive right now.

Data by YCharts.

What should you look for in a growth stock? Think about basic traits that successful companies in the past had in common. Here are three things Amazon, Microsoft, and Netflix shared 14 years ago:

• These were not obscure companies. All three had a large base of customers who were happy with the service.
• They were not struggling to grow and had a history of delivering strong revenue growth.
• They had opportunities for more growth.

To this day, Amazon is chasing a multitrillion-dollar e-commerce market that gives it ample room to grow for many years, not to mention the burgeoning opportunities for its cloud computing business. Amazon made $604 billion in revenue over the past four quarters. But its Amazon Web Services (AWS) cloud computing unit is one of its fastest-growing businesses and generated $98 billion of revenue in that same period. The growing adoption of artificial intelligence (AI) services is a tremendous growth opportunity for AWS, as well as Microsoft.

Microsoft has already launched Copilot, a generative-AI- powered assistant, on 225 million Windows PCs. The software leader has the second-largest cloud service, behind Amazon, and its productivity software is the gold standard for working professionals. This opens the door for lots of ways it can monetize AI services to pad its bottom line.

Netflix has 277 million streaming video subscribers and is still adding to that number. There are an estimated 1.5 billion households globally with broadband internet connections, which provides a long runway of growth.

Wall Street analysts forecast all three companies to continue growing their earnings at 14% or better annually over the next several years. Assuming those estimates prove accurate, investors who dollar-cost average into these stocks can expect a similar return on their investment.

To be a successful growth investor, you don't need to time the market or understand how to value a stock. All you need to do is identify well-known companies that are consistently growing their revenue, and then keep buying shares like clockwork.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Microsoft, Netflix, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy .