At 31, ‘cash-strapped’ single mom started saving $25 a month—she used it to launch a business that brings in $440,000 a year | CNBC make it
In the year 2000, Penny Bowers-Schebal was a 31-year-old single mother struggling to make ends meet. She was determined to secure her financial future beyond her employer’s 401(k) program at Progressive Insurance. Following the advice of financial guru Suze Orman, she embarked on a journey of financial independence by investing just $25 a month into a Dividend Reinvestment Plan (DRIP).
Under the DRIP, she chose Home Depot as her investment because her employer, Progressive, did not offer DRIP accounts at that time. The beauty of DRIPs is that all earnings are automatically reinvested to buy more shares of the same company, making it a manageable and affordable option for someone like Bowers-Schebal who lacked the resources to track the stock market or hire a broker.
Although the monthly $25 investment seemed modest, it proved to be life-changing. In 2017, she withdrew $25,000 from her Home Depot account to launch her own wedding gown shop called Formality Bridal in rural Geneva, Ohio. The store became profitable within its first year, and she even opened a second location in Erie, Pennsylvania, generating more than $441,000 in annual revenue.
Over two decades, Bowers-Schebal’s investment in Home Depot yielded an annual return of around 13%, outpacing the S&P 500’s average annualized return of 10.26% over the past 67 years. Her success story demonstrates that small, consistent investments can lead to significant financial growth and open doors to entrepreneurial opportunities.
While Bowers-Schebal’s story is remarkable, it also carries an element of luck, with Home Depot’s stock splitting multiple times during her investment period. Additionally, investing all your money in a single company can be risky, as it lacks diversification. To mitigate these risks, financial experts like Douglas Boneparth suggest exploring modern platforms like Robinhood, which allow investors to diversify their portfolios with ease and minimal transaction fees………
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How can small, consistent investments like Penny Bowers-Schebal’s DRIP strategy help individuals secure their financial future, especially in today’s dynamic business and investment landscape?
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Small, consistent investments can be a game changer for helping secure your financial future. By investing just a small amount every month into something as simple as an index funds that reinvests dividends automatically, you are passively growing your money and setting yourself up for financial prosperity in the future. Rather than impulsive spending and focusing on instant gratification, saving and investing your money can put you ahead of most Americans.