Retiring a millionaire is a goal many workers share, and it’s a realistic target. The average worker expects to need around $2 million to retire comfortably, according to a 2020 survey from Charles Schwab.
Saving that much money can be daunting, though. It may also seem impossible to become a millionaire someday if you’re earning an average salary.
The good news is that you don’t need to be rich or a stock market whiz to become a millionaire. In fact, all you need is the S&P 500.
How to invest in the S&P 500
The S&P 500 is a stock market index that includes 500 of the largest publicly traded companies in the United States. Most companies in this exclusive club are household names, including Amazon, Apple, Microsoft, and Google’s parent company, Alphabet.
While you can’t invest in the S&P 500 itself, you can invest in funds that closely track it — such as S&P 500 ETFs or index funds. These include the same stocks as the S&P 500 itself, and they’re designed to mirror the index’s performance.
One of the biggest advantages of investing in an S&P 500 ETF or index fund is that you’re less likely to lose money over the long run. The S&P 500 is considered a strong representation of the stock market as a whole, and the market has consistently experienced positive returns over time.
Keep in mind that this doesn’t mean you’ll never experience losses. Like any investment, the S&P 500 is subject to volatility, and there will be some years where the losses outweigh the gains.
However, over time, the S&P 500 has proven that it can recover from even the worst market crashes. So even if you experience losses in the short term, it’s very likely you’ll earn positive returns over the course of a few decades.
Becoming a millionaire
Since its inception in 1957, the S&P 500 has earned an average rate of return of around 10% per year. Again, this doesn’t necessarily mean you’ll earn a 10% return year after year, but over time, the positive and negative returns will likely average out to around 10% annually.
There are two key components to becoming a stock market millionaire: start saving early and invest consistently.
Full story on Fool.com
Leave a Comment