As costs continue to rise and retirement benefits become more expensive, you’ll likely need at least $1 million to cover all your future expenses. In fact, according to his 2023 study from Charles Schwab, the average worker is expected to need about $1.8 million to retire comfortably.
It may feel like an unattainable goal, but reaching $1 million or more is easier than you think, even if you’re not an experienced investor.
Investing in exchange-traded funds (ETFs) is a smart way to build long-term wealth with minimal effort. Each ETF contains dozens or hundreds of stocks, making it easy to create a well-diversified portfolio with a single investment.
While not all ETFs are suitable for all investors, there is one solid fund that is almost guaranteed to provide positive returns over the long term. For just $300 a month, you could potentially build a portfolio worth at least $1 million. Here’s exactly how to get there:
A safer and stronger investment
If you’re looking for an investment that protects your savings while making a difference, S&P500 ETFs can be a great option. Vanguard S&P 500 ETF (NYSEMKT: VOO) is a particularly good option.
The S&P 500 ETF is S&P500 index, that is, it contains the same stocks as the index itself and aims to follow its performance. Each S&P 500 ETF includes: Amazon, apple, coca colaand procter and gamble.
With the S&P 500 ETF, you can achieve instant diversification. By investing in just one share of this ETF, you will own shares in his 500 companies across various industries. This can significantly reduce risk, especially during times of market volatility.
Because the S&P 500 only includes companies that are doing well, this type of investment is much more likely to recover from a recession. While all investments are subject to short-term fluctuations, S&P 500 stocks have the highest potential for long-term growth.
The Vanguard S&P 500 ETF in particular is a well-established fund from a major brokerage firm. It also has one of the lowest expense ratios at just 0.03%. That means you’ll pay an annual fee of $3 for every $10,000 he has in your account. This is lower than the fees of many other ETFs, so it could potentially save you thousands of dollars in the long run.
Build a $1 million portfolio
While there are never guarantees when it comes to the stock market, the S&P 500 itself has a decades-long history of earning positive returns over long periods of time. Like any investment, it may be unpredictable in the short term. However, it is very likely that we will see positive returns over several decades.
Since its inception in 2010, the Vanguard S&P 500 ETF has earned an average annual return of approximately 14%. However, when compared to the long-term performance of the market, the expected performance may be higher going forward.
Historically, the market itself has earned an average annual return of about 10%. This means that while the market rarely sees returns of 10% each year, annual highs and lows average around 10% over the long term.
To be on the safe side, let’s assume your investments only earn an average annual return of 10%. If you invest $300 per month, here’s the approximate amount you’ll accumulate over time:
|
years |
Total portfolio amount |
|---|---|
|
20 |
$206,000 |
|
twenty five |
$354,000 |
|
30 |
$592,000 |
|
35 |
$976,000 |
|
40 |
$1,593,000 |
Data source: Author calculations via investor.gov.
To reach $1 million, you need to invest consistently for about 35 years. Although it will take a long time to wait, keep in mind that this investment requires little effort. You don’t have to worry about researching stocks or deciding when to buy or sell. Invest what you can afford each month and then sit back and wait for your money to grow.
The Vanguard S&P 500 ETF is a powerful investment vehicle, but it’s also one of the safest ETFs out there. By investing consistently and devoting as much time as possible to growing your money, you can earn more than you think.
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Katie Brockman has a position in the Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Amazon, Apple, and Vanguard S&P 500 ETFs. The Motley Fool has a disclosure policy.
Want a $1 million retirement fund? Investing $300 a month into this amazing ETF could get you there. The original article was published by The Motley Fool.
