How ‘Round Up’ Investing Can Earn an Extra $100K in Under 20 Years

John Csiszar

Sun, Feb 23, 2025, 5:00 PM 5 min read

Even if you’re a diligent saver, setting aside money every month can be a struggle. This is particularly true after the inflationary spike of 2022-2024. In addition to traditional strategies to help your savings such as “paying yourself first” by saving money before you even pay your bills, there’s another simple technique that can produce big long-term results.

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Here’s a look at how “round-up” investing can boost your savings by $100,000 or more in 20 years or less.

What Is ‘Round-Up’ Investing?

“Round-up” investing is often accomplished via an app, but can also be done on your own if you’re diligent. The idea is you round up all of your purchases to the nearest dollar, taking that excess amount and stashing it away in your savings or investment accounts.

For example, imagine you buy a new chair for your living room that costs $123.61. Instead of paying the exact amount, you’ll pay $124, reserving the extra 39 cents for your savings account. Again, this can be more easily accomplished with an app, as it will automatically round up your purchases for you and take care of the transfer to your savings account. However, if you’re good at keeping records, you can simply do the transfers yourself on a daily, weekly or even monthly basis.

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This method can be an effective way of saving because it doesn’t necessarily feel like money is coming out of your pocket. After all, whether you use a credit card or cash, paying a flat $15 for an item instead of, say, $14.78, likely feels the same. Plus, if you don’t like carrying coins around, you might even prefer this strategy from a more practical standpoint.

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46 Transactions per Month Is a Start

How can you turn these small transactions into $100,000 in less than 20 years? Imagine you make 46 transactions per month (in line with the national average, according to the Federal Reserve Bank of Atlanta), and they average 77 cents each. That totals $35.42 per month, or $425.04 per year. At a 10% average annual return in an investment account, that would translate to about $26,897. That’s only about a quarter of the way to $100,000, but it’s a pretty good start, considering you’re only saving $35 per month in change that you will hardly even notice.

If you’re a more frequent spender, the “round-up” strategy can actually work to your advantage. This is because you’ll be forced to save more every month if you round up every transaction.

If you round up 100 transactions every month at an average of 77 cents each, then you’re socking away $77 per month, or $924 per year. After 20 years of earning a 10% annual return, you’ll end up with $58,471.

How To Reach the Lofty $100,000 Level

There are five options available if you want to hit $100,000 after decades of round-ups. The first is to boost your average round-up amount. Strictly speaking, this is a bit beyond your control, as you can only round-up the prices that you’re given.

Another option is to boost your average annual return. However, 10% is about the upper limit that financial advisors use when making long-term projections, as that’s the average annual return of the U.S. stock market. Boosting your return would involve taking on excess risk, which may defeat the whole purpose of your investment plan.

The third option is to boost your number of transactions. While this is entirely within your control, it doesn’t make much sense to spend more money just so you can save more in round-ups.

Option four is simply to make additional investments on your own. While saving $77 per month might only get you just over halfway to your goal after 20 years, saving $132 per month — or just $55 more — would push that final total up past $100,000. As saving $55 per month won’t be a big ask with a bit of discipline, this is the most feasible way to hit your goal within 20 years.

The final option is to extend your time frame. If you begin rounding up at an early age (say, 25), you might have 40 or more years until retirement. Saving $77 per month for 40 years instead of 20 won’t just double your ultimate nest egg, it will boost it to nearly half a million dollars.

The Bottom Line

Saving $100,000 with minimal investments over a 20-year period can be a challenge, but it is doable. Supplementing your “round-up” investments with additional cash, or extending your investment time frame, can make it more likely that you’ll reach $100,000. But even if your savings “only” reach $50,000 or $25,000, the fact that you can do this by socking away a few pennies for every transaction is truly an impressive statistic.

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