Investing in This ETF Now Can Make You a Retired Millionaire

(Chuck Salita)

With the market significantly down from all-time highs, the benefits of a dollar-cost averaging in a low-cost, broad-based stock index fund are becoming abundantly clear. By making regular investments every payday in this market, every dollar you invest buys a lot of stocks while stocks are down. This may not seem like much help now, but it does mean that you have many posts available to accumulate in any subsequent recovery.

Against this background, making regular investments in SPDR S&P 500 ETF Trust (NYSEMKT: spy) Starting now can make you a retired millionaire. It’s a process that takes time no matter what the market does, and it’s a good reason to consider starting these investments now, even if the market continues to decline.

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Why invest in the SPDR S&P 500 ETF Trust?

The SPDR S&P 500 ETF Trust is a low-cost index ETF trying to track Standard & Poor’s 500 The index, which is often used as a proxy for the US stock market in general. With an ITd expense ratio of 0.09%, ETF investors can get it This index returns almost exactly the samewhile losing almost nothing to fund management fees.

This combination of stock market like returns with extremely low internal costs makes the SPDR S&P 500 ETF a simple, one-stop shop for investors trust. It is particularly effective for investors who do not want or are unable to devote a lot of time and effort to researching financial reports for individual stock selection. When you add the fact that Index investing tends to outperform the funds managed by the best and brightest on Wall Street over timeThe SPDR S&P 500 ETF Trust has become a more compelling option.

How long will it take to become a millionaire?

The path from $0 to $1 million depends largely on two main factors: how much you can invest each month and the rate of return you earn along the way. The good news is that if you have a long enough time horizon, reaching millionaire status by retirement age is possible, even for people with modest incomes.

The following table shows how many years it takes to reach millionaire status, depending on what you can save each month and the annual rate of return you earn along the way.

monthly investment

10% annual returns

8% annual returns

6% annual returns

4% annual returns

$2200

15.7

17.5

19.8

23.1

2000 dollars

16.5

18.4

20.9

24.6

1500 dollars

18.9

21.3

24.5

29.3

1000 dollars

22.4

25.5

29.9

36.7

500 dollars

28.8

33.4

40.1

51.0

300 dollars

33.7

39.4

48.0

62.5

This maximum savings rate — $2,200 per month — is a savings rate that can be contributed to tax-advanced, retirement-focused accounts for most people. Workers under 50 can generally contribute up to $20,500 annually to a company-sponsored retirement plan such as a 401(k). They can also usually get up to $6,000 a year in their IRA. (Contribution limits are higher for workers 50 and older.)

This minimum savings rate – $300 per month – comes to about $10 per day. Even at this savings level, as long as you invest consistently for the duration of a typical work career, you have a good chance of reaching millionaire status by the time you retire.

let’s start

No matter where you are in your career, you will never again have more time before retirement than you do now. This makes today a great day to put your plan into action. The earlier you start, the more cells in that table will be at your fingertips, improving your chances of retiring from a millionaire.

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Chuck Salita He has no position in any of the mentioned shares. The Motley Fool does not have a position in any of the stocks mentioned. Motley Fool has a profile Disclosure Policy.

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