Dear DTA, 

I’m in my late 30s. Getting a late start on this stuff. But I’m trying my best. I can only invest about $250 per month. Is this enough to make a difference? 

-Derek R. 

Hi, Derek.

It’s great to hear from readers like yourself.

Thanks so much for your readership, and thanks for writing in.

You might think you’re getting started late, but your late 30s is still relatively early.

There are many Americans out there who never get started. Better late than never!

I’ve got some great news for you.

It’s not too late. 

In fact, you could end up making a tremendous difference in your financial options down the road.

I’ll show you exactly how that might work.

First, with only $250/month, you’ll want to make sure you keep fees low. Fees can quickly eat up that kind of capital.

Fortunately, investing fees have never been cheaper.

A few decades back, you had to call a broker and pay $100 to buy stock.

Now you can log into your online account and instantly purchase stock for next to nothing.

Some platforms out there are even free. It’s an incredible time to be an investor.

I would encourage you to do your research and pick out the brokerage service that makes the most sense for you.

Once you have an account open and funded, it’s time to invest.

Long-term investment success will largely hinge on the investment strategy and how you go about applying it.

I’m a longtime advocate of dividend growth investing.

This strategy involves buying shares in world-class enterprises that pay their shareholders reliable and growing cash dividend payments.

The Dividend Champions, Contenders, and Challengers list contains hundreds of these stocks.

It shouldn’t be surprising that many stocks on that list are household names.

They’re blue-chip stocks.

For good reason.

After all, it takes a special kind of business to be able to produce the growing profit year in and year out that can sustain the growing dividends year in and year out.

I’m such a fan of this strategy, I’ve personally used it to become financially independent and retire in my early 30s.

I describe that entire journey – from zero to hero – in my Early Retirement Blueprint.

I put my money where my mouth is.

High-quality dividend growth stocks now make up the bulk of my wealth, as you can see in my FIRE Fund.

Jason Fieber's Dividend Growth PortfolioThat’s my real-life and real-money early retirement stock portfolio.

It generates the five-figure dividend income I need to live off of.

And that passive income is growing well in excess of inflation. That means my purchasing power is regularly increasing, which means my overall opportunities in life are expanding.

I’m sharing all of this with you, Derek, so that you can see just how powerful this strategy is.

Now, I invested a lot more than $250 per month to get to where I am.

But my time frame was particularly aggressive.

Furthermore, $250/month can still make a huge dent in your financial outcome in life.

How huge? 

Check this out.

If you start with $0, add $250 per month, and compound your capital at a 10% annual rate, you end up with $324,545.30 in 25 years.

We’re talking $325,000.

That’s a huge sum of money.

And it didn’t take much of a stretch to get there.

I assumed a 10% annual rate of return, which is roughly in line with what the broader stock market has done over the long term.

But you might actually have a shot at doing even better if you buy high-quality dividend growth stocks when they’re undervalued.

After all, investors like Warren Buffett have vastly outperformed the market by simply picking up great businesses when they were cheap.

Still, you don’t need to outperform here. I’m not factoring in any outperformance.

The time horizon I assumed was 25 years.

That puts you at right about a traditional retirement age. Say, 63 years old or so.

You’d almost certainly have a nice chunk of monthly income coming in from Social Security.

The Social Security Administration (SSA) noted in September 2018 that the average retired worker was earning $1,420 per month in benefits – just over $17,000 annually.

That’s the average. And that’s using today’s numbers. Cost of living adjustments (COLA) means the odds are good that the average will be even higher by the time you retire, Derek.

Plus, a portfolio of $325,000 yielding 4% would throw off another $13,000 per year.

Not to mention, high-quality companies should be regularly increasing their dividend payments, providing you a nice tailwind throughout your retirement.

You could be looking at a very healthy retirement.

It’s $30,000/year using today’s average SSA benefit.

And much of this income could be set up so as to be advantaged in terms of taxation.


It gets better.

In my view, this is more of a worst-case scenario for you.

I’m willing to bet you have access to some kind of 401(k) or other defined-contribution plan through your work that might offer tax-advantaged growth and/or a company match.

Also, it’s hard to believe that you won’t be able to increase your $250/month investment capital over time, be it through lifestyle adjustments and/or raises at work.

Moreover, I believe that you’ll want to find ways to save and invest even more once you start to see the results.

Financial success begets more financial success. 

If you’re ready to learn more, make sure to check out fellow contributor Dave Van Knapp’s excellent Dividend Growth Investing Lessons.

Undervalued Dividend Growth Stock of the Week by Jason FieberThese articles teach you pretty much everything you’d want to know about DGI.

Once you’re ready to invest capital, we’ve got you covered with a plethora of content.

I personally highlight a compelling dividend growth stock idea every Sunday.

I comb the CCC list for high-quality dividend growth stocks that appear to be undervalued.

Then I present my findings in the Undervalued Dividend Growth Stock of the Week series.

I understand how you feel, Derek. You think you’re getting started late with only a little bit of money.

Well, I’m here to tell you that you can set yourself up with a very healthy and wealthy retirement.

But you must start working toward your goals today.

I wish you luck and success.

Jason Fieber

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Disclaimer: Jason Fieber is not a licensed financial advisor, tax professional, or stock broker. Please consult with a licensed investment professional before investing any of your money. If your money is not FDIC insured, it may decline in value. To protect the privacy of our readers, any names published in this article are under aliases. In addition, text may be edited, omitted or paraphrased for grammar or length.