Can You Retire a Millionaire with ETFs Alone? It’s definitely possible — it just takes patience and commitment.
- A diversified portfolio of ETFs could help you weather market ups and downs.
- Here’s how a $20,000 initial investment could turn into $1 million by retirement.
There is currently about $7 trillion invested in exchange-traded funds, or ETFs, in the U.S. — that’s up about 27% from the end of 2020, and it’s more than seven times the total from just a decade ago in 2010. ETF assets have been growing at a roughly 25% annual rate over the past decade, and Bank of America released a study not too long ago that projected ETF assets will hit $50 trillion in the U.S. by 2030.
With so many options available, is it possible to retire a millionaire with ETFs alone?
As ETFs are baskets of stocks, like mutual funds, that trade on an exchange like an individual stock, they are already diversified to some extent. So, just as you would with a portfolio of stocks, a portfolio of ETFs would be diversified by risk profile to best navigate the markets ups and downs.
The long run
The past 10 years were particularly good for the stock market, as we had one of the longest bull markets in history. We can’t really expect that type of performance again over the long run, but since all of these funds have long, 20-year-plus track records, let’s take their returns since inception and extrapolate them out over the next 30 years.
If you started with $5,000 in each, invested $100 per month, and calculated their growth with their returns since inception, how much would you have accumulated in 30 years?
If the Invesco QQQ averaged a 9.7% return over the next 30 years, you’d have about $303,000, while the SPDR S&P 500 Trust would have roughly $349,000, with a 10.3% annualized return. The Vanguard Total Stock Market ETF, with its 9% return since inception, would accumulate about $257,000 after 30 years, while the iShares Russell 2000 Growth ETF would have about $159,000 over that period with its 6.9% annual return. If you add it all up, you’d have about $1.1 million after 30 years.
This is purely hypothetical, as it’s impossible to know what the market will do over the long run. But we do know the S&P 500, has returned about 10% per year, on average, since its inception in 1957. It also assumes this is your only retirement vehicle.
Sometimes, its better to get a little help and coaching. If you’re still wondering how to get started, do send us a note, and we’ll link you to a certified financial professional in the industry.
Contact NextLifeBook https://www.nextlifebook.com/contact-us
Missed our news yesterday? Read here at https://www.nextlifebook.com/estate-planning/simple-lifestyle-for-a-happy-retirement/
Catch us on: Facebook Instagram YouTube LinkedIn
Facebook: https://www.facebook.com/nextlifebook
Instagram: https://www.instagram.com/mynextlifebook
YouTube: https://www.youtube.com/channel/UCBmm-Ol1l6BBCkHt3jxTvwg
LinkedIn: https://www.linkedin.com/company/nextlifebook
You can read more about Can You Retire a Millionaire with ETFs Alone? – over at https://www.fool.com/investing/
