You don’t have to start investing very early to make big savings.
Many people can’t afford to start investing when they’re younger. But starting later doesn’t mean it’s too late to invest and save for a nice retirement savings. Also, as you advance in your career, your wages should increase, and you may be able to invest more money (per month) than if you started years earlier. So, it may not be a big disadvantage.
Below we show you how much you need to invest each month to build a portfolio worth at least $1 million by the time you’re 40, or retire, if you invest for 25 years.
Investing more money can make up for lost time
When saving and investing for the long term, there are three important variables to consider: time, money, and risk. For example, you can make up for less time by investing more money or taking a bit more risk. In extreme situations where you don’t have many years left to invest or not much money to invest, risk is the only lever available to you, which is obviously not ideal when talking about retirement.
But if you have 25 years left to invest, you still have plenty of time. S&P 500 The long-term average rate of return is about 9.7%. If you can achieve that rate of return over a 25-year period, your investment could grow tenfold. This means that a $100,000 investment could grow to $1 million in a relatively safe investment that mirrors the market.
Top growth funds can help you get the most out of your money
You can accelerate your returns by investing in investments that have the potential to outperform the market. Invesco QQQ Trust (QQQ 0.59%)Exchange traded funds (ETFs) are Nasdaq 100 The index encompasses the largest non-financial stocks on the exchange. Its top holdings include: apple, Microsoft, NVIDIAand other stocks familiar to technology investors.
The fund generated a total return (including dividends) of 473% over 10 years, averaging a compound annual growth rate of 19%. But to be conservative, let’s assume that the average return will be smaller but slightly higher than the S&P 500’s gains.
Assuming you have 25 years until retirement, here’s a breakdown of how much you’d need to invest each month at various growth rates.
| Growth rate |
Monthly payment |
|---|---|
| Ten% | $753.67 |
| 11% | $634.46 |
| 12% | $532.24 |
| 13% | $445.02 |
| 14% | $370.94 |
| 15% | $308.31 |
Authors’ calculations.
As you can see, there are certainly benefits to targeting funds that have the potential to outperform the market rather than simply mirroring an index. While the S&P 500 offers some stability and safety, taking a bit more risk and investing in a tech-focused fund like the Invesco ETF might mean paying less each month.
Of course, returns are never guaranteed, but by focusing on the top tech and growth stocks on the Nasdaq, it’s a reasonable risk and could yield big rewards for your portfolio.
No matter your age, investing is never a bad idea
Your investment strategy may change over time, but you have plenty of options with the many stocks and ETFs you can invest in. If you start investing early, you can take a little more risk and focus on growth stocks or technology. If you’re closer to retirement, safe, blue-chip stocks that pay dividends may make much more sense.
But the key is to save and invest your money regularly, and even in retirement, stocks can be a valuable source of regular dividend income.
It’s also possible that your investment will perform better than expected, so it’s generally a good idea to invest in quality stocks. Not every year will be a good year for the market, but over the long term, quality investments will appreciate in value.
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends Nasdaq and recommends buying Microsoft January 2026 $395 calls and selling Microsoft January 2026 $405 calls. The Motley Fool has a disclosure policy.
