Investment of $10 daily could potentially turn you into a millionaire by retirement age
Become a Millionaire by Investing Just $10 a Day: The Power of Compound Interest
Investing a small amount daily into the U.S. stock market can potentially result in becoming a millionaire over time. Two Exchange-Traded Funds (ETFs) that offer straightforward and diversified exposure to the U.S. stock market are the Vanguard Total Stock Market ETF and the Vanguard S&P 500 ETF.
The Vanguard Total Stock Market ETF provides investment in over 3,500 U.S. companies of all industries and sizes, while the Vanguard S&P 500 ETF tracks the S&P 500, a world-renowned index comprising 500 of the most prominent U.S. companies. Both ETFs have very low fees and a minimum investment of just $1, making them accessible for everyone.
Investing $10 a day ($3,650 annually) in these funds, assuming an annual average return of 9%, will take approximately 38 years to become a millionaire. This estimate is based on the power of compound interest, with the investment growing exponentially over time. Assuming a steady 9% return, consistent daily contributions, and reinvestment of dividends, the investment reaches $1,000,000 in about 38 years [2][4].
The time it takes to become a millionaire by investing this way depends on various factors, including the investment amount, time, and market conditions. However, the U.S. stock market has shown substantial growth over many decades and is considered a reliable investment option [5].
Increasing the daily investment amount can significantly decrease the time it takes to reach $1 million. For example, investing $20 daily would take approximately 30 years, $30 daily would take approximately 26 years, $40 daily would take approximately 23 years, and $50 daily would take approximately 21 years [3].
It's important to prioritize saving and investing for retirement without sacrificing quality of life. The S&P 500 has returned approximately 10% annually over the past 50 years, and the Vanguard Total Stock Market ETF has generated an annualized return of approximately 9% since its inception in 2001 [1][3].
The Vanguard S&P 500 ETF has averaged an annual return of 14.5% since 2010, making it a potentially high-yield investment option [2]. However, it's important to remember that the market may experience ups and downs, but it has always reached new highs eventually [6].
In conclusion, investing a small amount daily into the Vanguard Total Stock Market ETF or Vanguard S&P 500 ETF can be a realistic and achievable way to become a millionaire in just under four decades, given historical return patterns and compounding effects. By starting early and maintaining consistent investments, individuals can take advantage of the power of compound interest and potentially secure their financial future.
[1] https://investor.vanguard.com/etf/profile/vti [2] https://investor.vanguard.com/etf/profile/voo [3] https://www.fool.com/investing/2018/05/21/historical-returns-of-the-vanguard-total-stock-marke.aspx [4] https://www.fool.com/investing/2023/03/15/how-long-will-it-take-to-reach-1-million-investing.aspx [5] https://www.investopedia.com/terms/u/usstockmarket.asp [6] https://www.fool.com/investing/2019/08/05/the-sp-500-has-risen-every-year-for-20-straight-ye.aspx
- By investing $10 a day into the Vanguard Total Stock Market ETF or the Vanguard S&P 500 ETF, one can potentially build their personal-finance portfolio and work towards a retirement filled with financial stability.
- As these Exchange-Traded Funds (ETFs) have demonstrated consistent returns over the years, investing a higher amount such as $20, $30, $40, or $50 daily could potentially result in reaching $1 million even quicker.
- Given the power of compound interest, consistently investing a part of one's money into these ETFs with a long-term perspective can lead to substantial wealth accumulation and a comfortable retirement.
