Investing your first $100k is your most important financial goal on your way to financial independence. The sooner you reach your first $100k, the sooner your wealth starts to skyrocket because of the power of compound interest.
If you want to boost your progress toward your $100k investing milestone, you absolutely should be investing the cashback rewards you get from using a credit card or cashback debit card. Investing your cashback could potentially help you make a noticeable dent in your progress toward your $100k investing goal without changing your budget.
If you want to reach your $100k investing goal in the next 10–15 years, here’s how investing your cashback could help you reach this goal:
Reaching $100k in 10 years
Investing $100 in cashback per year
If you get $100 in cashback per year and you invest that money for 10 years, you will have contributed a total of $1,000 in cashback toward your $100k investing goal. After 10 years, you could get $449 in compound interest if you get an 8% rate of return.
In total, that’s $1,449, which is 1.4% of your $100k investing goal, and while that might not sound like much, every little bit helps when you’re investing your first $100k:
Investing $250 in cashback per year
If you get $250 in cashback per year and you invest that money for 10 years, you will have contributed a total of $2,500 in cashaback toward your investing goal, and you could earn about $1,121 in compound interest from that cashback if you get an 8% rate of return. That’s a total of $3,621.
Investing your cashback could help you reach about 3.6% of your 100k investing goal. Again, if you struggle to invest, every little bit extra that you can contribute to your investing goals helps.
Investing $500 in cashback per year
If you earn $500 per year in cashback and you invest that money each year, you will have invested $5,000 in cashback after 10 years and you could earn about $2,243 in compound interest if you get an 8% rate of return. That’s a total of $7,243—about 7% of your total 100k goal:
Investing $750 in cashback per year
Perhaps you get a lot of cashback because you take advantage of cards that offer 5% cashback on categories like groceries and/or you just have larger expenses for a larger family.
If you invest $750 in cashback per year for 10 years, you will have invested $7,500 in cashback and you could gain $3,365 in compound interest if you get an 8% rate of return. That’s a total of $10,865 that you could put toward your $100k investing goal.
Just by investing your cashback, you could reach 10% of your 100k investment goal.
Reaching $100k in 15 years
Investing $100 in cashback per year
If you invest $100 in cashback per year, you will have contributed $1,500 in cashback after 15 years and you could get $1,215 in compound interest if you get an 8% rate of return. Combined, that’s a total of $2,715—just over 2% of your $100k investing goal.
Investing $250 in cashback per year
If you invest $250 in cashback per year, you will have contributed $3,750 in cashback after 15 years and you could get $3,038 in compound interest if you get an 8% rate of return. That’s about $6,788 total—6.7% of your $100k investing goal.
Investing $500 in cashback per year
If you invest $500 in cashback per year, you will have contributed $7,500 in cashback after 15 years and you could get $6,076 in compound interest if you get an 8% rate of return. That’s about $13,576 in total, which is an incredible 13.5% of your $100k investing goal:
Investing $750 in cashback per year
If you invest $750 in cashback per year, you will have contributed $11,250 in cashback after 15 years and you could get $9,114 in compound interest if you get an 8% rate of return. That’s about $20,364 in total, which is an astounding 20% of your $100k investing goal:
Tips
1. Don’t spend more just to get more cashback.
If you spend more just to get more cashback, you’re just losing money—potentially a whole lot of money. The entire point of earning cashback is to get the most value for your money without changing your budget, so don’t spend more just to get more cashback.
There have been many studies that link credit card use to higher spending, so you really want to make sure that you’re not spending more just to get more cashback. If you use your credit card for essential purchases that you would have made anyway, then that’s one way to keep your spending in check while still getting cashback.
2. Use a cashback debit card.
Whether you want to increase the amount of cashback you earn or whether you want an alternative to a credit card, a cashback debit card can help you earn more without changing your budget.
Here are some of the best cashback debit cards I found while researching this subject:
- Affinity Federal Credit Union cashback debit card: Earn 1% cashback.
- Discover cashback debit card: Earn 1% cashback on up to $3,000 of purchases each month.
- Primis Perks cashback debit card: Earn 50 cents cashback for every debit card purchase.
I don’t benefit from promoting these cards—I just love the idea that you can earn cashback on your debit card purchases, and these were the cards that I could find that give you actual cashback instead of points or other rewards.
3. Pay off your balance in full every month.
If you’re using a credit card that offers cashback, don’t let high interest rates cancel out the cashback that you’re getting: Make sure that your credit card bill is paid in full each month. If you know that you’ll struggle to pay off your credit card balance if you use a credit card, opting for a cashback debit card can be a great alternative if you still want to earn cashback.
Why invest your cashback if you get minimal cashback?
If you don’t think that investing your cashback is worth it, perhaps you feel like the small choices you make ultimately don’t matter. Part of going from feeling financially stuck to feeling financially empowered is behaving as though every dollar counts. This means that no amount of money is too small to put toward achieving your financial goals.
Even if you get minimal cashback, you should still put that money toward your $100k investing goal because reaching your first $100k is one of your most important—and most difficult—financial goals. Reaching $100k is one of your hardest financial milestones to accomplish because you don’t yet have a lot of compound interest working in your favor to build wealth automatically.
After you reach $100k is when you start to get a lot more momentum on your wealth-building journey: Even if you keep investing the same amount of money each month, you will reach $200k much faster than you reached $100k because of the power of compound interest. Check out this article for more info on why reaching $100k as soon as possible is your most important goal.
Even if the cashback you invest only makes up less than 5% of your $100k investing goal, you should take advantage of every bit of help that you can get to reach this goal as soon as possible.
How to get started on your path to $100k
Investing your first $100k may seem impossible, but you can chip away at this goal by taking small steps like investing your cashback or setting mini milestones. Here are some great resources on how to make reaching your $100k investing goal seem more achievable, especially if you earn a lower income:
- Invest Your First $100k Step-by-Step: How to Save Your First $1,000
- Invest Your First $100k Step-by-Step: How to Save Your First $5,000
- Invest Your First $100k Step-by-Step: How to Save Your First $10,000
- Why Investing Your First $100k Isn’t as Daunting as It Sounds
Investing $100k is your most important financial goal on your way to financial independence, which is why you should do everything you can to reach this goal as soon as possible. Investing your cashback is one way to boost your progress toward your $100k investing goal without needing to change your budget, so there’s no reason not to put your cashback to work to meet your investing goals.