How To Invest $500 Per Month

Lets discuss how to invest $500 per month, and the best places you can invest your money to build wealth - enjoy! Add me on Instagram: GPStephan

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My ENTIRE Camera and Recording Equipment:

FIRST: Build up a 3-6 month emergency fund.
Having a 3-6 month emergency fund means you won’t have to rely on credit cards to pay your way through an event, you won’t have to sell stocks or other investments to pay for it, and you won’t have to take on high interest debt anytime something happens.

SECOND: Roth IRA
This is a tax advantaged retirement account that lets you contribute post tax money…meaning taxes have already been taking out of what you earned…and by the time you’re 59.5, all the PROFIT in that account can be accessed completely tax free.

THIRD: Traditional 401k
This is an account that you invest PRE-TAX money into, and then you’re taxed when you begin withdrawing the money after the age of 59.5. For example, if you invest $500 per month into a 401K, you’ll be taxed as though you make $500 per month LESS on your paycheck. That saves you money upfront, allowing you to invest MORE money than you’d have left over AFTER paying taxes.

From my perspective, the 401k really only makes sense in a few scenarios:

The first is when your employer offers what’s called a 401K match…this is when they will match your contribution, dollar-for-dollar, up to a certain amount. Essentially, this means you’re doubling your money immediately with zero risk whatsoever.

Secondly, a 401k makes sense if you’re in a HIGH tax bracket now…and expect to retire on much less, in a LOWER tax bracket. The variable here is if you end up making more money in retirement, then you’ll pay more in taxes LATER than you would have just paid now. And, if the tax rates go UP in retirement…then you might also pay more.

FOURTH: Paying down any high interest rate debt you have.
If you invest your money, on average, you’d likely expect about a 6-12% return in a broad index fund…and to do that, you’re taking on some risk that there will be years where you LOSE money. On the other hand, paying down debt is like getting a guaranteed return on your money at whatever interest rate you’re paying.

So paying off a 15% interest credit card balance is like getting an immediate, guaranteed 15% return on your money. Same applies to ANY outstanding loan you have. My basic rule of thumb is this: If you’re paying above a 4.5% interest rate on your money, it’s probably best just to pay it off, because you’re getting ABOUT what an investment would generate after taxes. So there’s no downside.

FIFTH: Invest in yourself
When we look at the ROI of investing $500 per month, in the very beginning, it’s not much. Even at a 10% return within a year, we’re talking about a few hundred dollars. The BEST ROI, however, comes from none other than yourself. YOU have the ability to make a few hundred dollars IN A DAY with the proper education or certification, and especially when your young, making more money can set you up on a completely new trajectory in terms of building wealth.

SIXTH: A taxable account
By doing this, you can invest $500 per month into individual stocks or index funds you find interesting…you can basically just invest your money normally, without any retirement benefits later on. BUT, by doing this, you’d have access to ALL of your money, anytime you need it, without paying an penalties for cashing out before the age of 59.5

SEVENTH: Start a business
That might be enough to buy some basic equipment to get going, it might be enough to get a website built and order inventory, it might be enough to start up a small agency that you can run remotely, it could be enough to even just buy some landscaping equipment and start mowing lawns. The possibilities are basically limitless.

[raychristopher]

There are a lot of strategies to make tongue-wetting profit that the average joes don't know. . Personally, the financial-market for me seems the only way forward with my long time horizon (accrued roughly $457k in gains since Mid 2021 ) but if you don’t have that fortune of time it’s a tough market out there almost nowhere feels safe!

[krouzu]

Can't pay off debt if Graham taught you early in life how not to have any 😎

[TamNguyen]

Step 1. Pay all debts. From small to big, high interest rate to low interest rate.
Step 2. Build emergency fund of 3-6months of expenses. The money need to be easy to be liquidated and earn at least 2% interest.
Step 3. Invest in 401k to reduce gross income lower tax income and lower tax. In case of Employer Match, go for it!
Step 4 Max out ROT IRA (retirement account)
Step 5. Invest in yourself. Education and certification. Example: Real estate licence, trade certification, investment books, networking events and seminars.
Step 6. Opening taxable account: To invest in stocks and index funds.
Step 7. Start your own business. Examples: website, equipments, inventories, social media.


This reminds me of Dave Ramsey.

[dlcmiamiinc]

How to invest $500 a month?

Instead of buying Starbucks, make .20 cent iced coffee

[echome]

I wish someone told me this when I was 20. I started at 30 and lost out on years of compound interest

[sheneedsyrruup]

I'm 17, looking to get into real estate, So far I've had a 12 month future budget, savings, emergency savings, and a Roth IRA fund.

[alejandromunoz]

I was watching this near my parents that were eating. They heard and looked glad I was learning about useful stuff up until the point Graham decided to say MAKE SURE YOU SMASH THAT LIKE BUTTON.

[dj-emyg]

Graham, I'm honestly really happy I found your channel. I say this to everyone but this is the best channel on YouTube and that is a fact. You're changing so many young people's lives.

[kingX]

Tbh saving $500 a month is a lot for most people but at least it’s reasonable.

[extracurricular]

Investing in yourself is so important and at all levels of wealth, 80% of the time it's just breaking psychological barriers/beliefs you had or exposing yourself to know what you don't know. But before all that, have an emergency account you'll make better decisions that way

[nicolesonk]

Ok but like can you explain Roth IRA as if you were talking to a 5 year old?? lol

[cryptkeeper]

I like the way you put the summary of what you talk about in the description. Very helpful. Thanks 😊

[kodyscameratours]

I'm so glad we live in the time we do, because of you and Kevin I've been investing $500 a month (200 on my own and 300 through work) and started my own business.
Your videos have been a huge impact on my life to a point where my gf rolls her eyes every time you have a new video. Thank you, thank you, thank you! !!

[Xelliz]

A year later and there are no 2% savings accounts... at least that I am aware of.

[gloria]

2:40 1. Emergency Fund
4:10 2. Roth IRA
6:40 3. IRA
8:57 4. Pay Debt
10:37 5. Invest in Yourself
12:02 6. Taxable Account
13:22 7. Start Your Own Business


Thanks for the video, Graham!

[ravenswood]

Wish you would make some videos for people who weren't properly educated about finances in their 20s and are starting at 30+. Like tips for compounding/adding up faster.

[SalesforceTayler]

#4 is what I’m doing. In my 20s I decided to buy a travel trailer to live in to save money. (If you are thinking of buying a RV or travel trailer, don’t do it) I didn’t realize the loan wasn’t fixed and it’s been a pain for almost 10 years. I’ve finally almost have it paid off and will essentially be giving myself a $500 dollar raise. I will take that and save it.

[radixd]

Graham, can we get another real estate video? Maybe do an analysis on a potential rental property... even if you aren't seriously planning to buy it?

[ildipali]

Idk why but Graham makes me feel like im doing something right in life...

[NickPeitsch]

Automatic deposits to your investment account are invaluable in the long run 👌