Investing your money in a brokerage account could do a lot of great things for your finances. If you’re able to grow your balance nicely, you’ll have the flexibility to cash out investments to meet different goals, like buying a house. Or, you may decide to hang onto your investments and reserve that money for your retirement.
You may have the goal of seeing your brokerage account balance reach the $25,000 mark. And that’s certainly a nice sum of money.
Now, let’s get one thing out of the way. If you’re starting with a balance of $0, or a modest balance of $1,000 or less, then you’re probably not going to magically get to $25,000 in short order unless somebody hands you a massive check. But there are steps you can take to get to $25,000 in a fairly swift manner if you already have a pretty large balance to begin with.
1. Bank a large windfall or bonus
Many companies give out performance or holiday bonuses at the end of the year. If you have, say, a $20,000 brokerage account balance right now and you receive a $5,000 check, banking it all could get you to your goal.
Of course, avoiding the temptation to spend that money isn’t so easy. But it might help to remind yourself of the different things a larger brokerage account balance can do for you — like make it possible to buy a house, put your kids through college, and so forth.
Also, if you got a tax extension and are first submitting your 2022 return in October, you might have a large tax refund coming your way. Banking that could also get you to $25,000.
2. Load up on stocks
Going from a few hundred dollars in a brokerage account to $25,000 isn’t going to happen overnight. And you shouldn’t expect it to — nor should you specifically load up on risky, speculative investments to reach that goal. A better bet is to load your portfolio with quality stocks and hold them for as long as you can.
It’s true that any stock can lose value at any time. But overall, the stock market has delivered an average annual return of 10% over the past 50 years, as measured by the performance of the S&P 500. If you manage to put $500 a month into your account and are able to generate that same return, you’ll be at $25,000 in 3.7 years.
3. Make sure you’re diversified
If you want to increase your chances of scoring a high return in your brokerage account — something that could get you to $25,000 sooner rather than later — then you’ll want to make sure your holdings are nice and diversified. And you can go about that in a couple of ways.
First, you could simply buy a few dozen stocks across a range of different industries. But that’s going to take a lot of legwork. So a smarter bet may be to load your brokerage account with S&P 500 ETFs, or exchange-traded funds. In doing so, you’ll effectively get to own a piece of 500 large companies with a single investment.
It’s important to have realistic expectations about how quickly you can grow your brokerage account balance. But these tips could get you to $25,000 in a much faster time frame than anticipated.
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