Here's How Long It Actually Takes to Build a $1 Million Portfolio, According to History
Key PointsInvesting in an S&P 500 ETF is one of the best ways to take advantage of U.S. economic growth.
According to financial history, reaching the $1 million milestone in investment is more achievable than it may initially seem. Tracking the largest 500 U.S. companies, the S&P 500 has become a popular choice for investors aiming to capitalize on a growing U.S. economy. The Vanguard S&P 500 ETF (VOO) is a popular option due to its low 0.03% fee, equivalent to $0.30 per $1,000 invested.
Historically, the S&P 500 has averaged over 8% annual total returns, which will be used in this analysis. Based on different monthly investment amounts, here is how long it would take to reach the $1 million mark:
- Investing $500 per month would take approximately 16 years and 4 months.
- Investing $1,000 per month would take around 9 years and 6 months.
- Investing $1,500 per month would take about 6 years and 8 months.
- Investing $2,000 per month would reach the $1 million mark in roughly 4 years and 10 months.
The key to reaching $1 million lies in compound earnings, where the money invested begins to generate returns on itself. This effect significantly reduces the time required to accumulate wealth in the stock market. While strictly saving may not be sufficient to hit the $1 million mark, even if an individual saves $40,000 annually, it would take 25 years, and $25,000 annually would require 40 years. The crucial factor is consistency and having trust in the long-term performance of the market.
Written by urgent.news from Yahoo Finance's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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