These 6 Items Are Over $50 Off at Sam’s Club Now
Becoming a Sam's Club member could help you keep more money in the bank. Don't miss these limited-time sales, which promise discounts of over $50.
Retiring a millionaire may seem out of reach, especially if you’re not already wealthy. However, it’s easier than you may think to retire rich, even if you’re earning an average salary.
The key is to choose the right investments. Some investments promise to make you a lot of money in a short amount of time, but they can be incredibly risky and, oftentimes, too good to be true.
There’s one investment, however, that could potentially make you a millionaire with little to no effort: the S&P 500 ETF.
Image source: Getty Images.
What are S&P 500 ETFs?
The S&P 500 is a stock market index that includes 500 of the largest U.S.-based companies, such as Amazon, Apple, and Microsoft. An S&P 500 ETF, then, is an investment that follows the index and attempts to mirror its performance.
When you invest in an S&P 500 ETF, you’re instantly buying all the companies within the index. This creates an instantly diversified portfolio with just one investment.
This type of investment is also more likely to see consistent growth over time. While the S&P 500 is subject to volatility and has experienced corrections and crashes in the past, historically, it’s always recovered from downturns. Although there are never any guarantees when it comes to the stock market, there’s a very strong chance your S&P 500 ETF will grow over time as well.
It takes time to make a significant amount of money with S&P 500 ETFs. But with enough patience, you could earn $1 million or more.
Reaching millionaire status
Again, the S&P 500 does face its fair share of volatility. Historically, though, it’s earned an average rate of return of around 10% per year. In other words, the highs and lows it experiences from year to year average out to around 10% over time.
Say you want to retire with $1 million, and your investments are earning a 10% average annual rate of return. Here’s how much you’d need to save each month, depending on how many years you have to let your money grow.
Number of Years
Amount Saved per Month
Total Savings
40
$200
$1.062 million
35
$325
$1.057 million
30
$525
$1.036 million
25
$900
$1.062 million
20
$1,500
$1.031 million
Source: Author’s calculations via Investor.gov
The earlier in life you’re able to begin saving, the less you’ll need to invest each month to retire a millionaire. So even if you don’t have much to save now, it’s wise to get started anyway rather than waiting too long.
While it does take decades to accumulate $1 million or more with S&P 500 ETFs, the good news is that besides investing consistently, you don’t need to do anything to help your money grow. You never need to choose individual stocks, and you don’t have to worry about buying or selling investments. All you have to do is sit back and wait.
S&P 500 ETFs are perfect for those looking for a passive investment that requires next to no effort. By starting to invest now, you could potentially be a millionaire by the time you retire.
10 stocks we like better than Walmart
When our award-winning analyst team has an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now… and Walmart wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
Stock Advisor returns as of 6/15/21
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Katie Brockman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Apple, and Microsoft. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
