When considering the amount to save for retirement, many individuals set their sights on the magical figure of a million dollars. If you already have a head start with, say, $100,000 socked away, you’re off to a good start. But how can you grow that amount to a million bucks?
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Invest in Index funds
To kick things off, an excellent suggestion is to invest most or all of your long-term dollars in the stock market, specifically via a simple, low-fee stock index fund — available in mutual fund or exchange-traded fund (ETF) form. The stock market has historically delivered an average annual growth of about 10%. Even assuming a slightly lower return of 8%, investing annually could potentially grow your wealth to a million dollars within approximately 26 years. Not bad, considering you’re starting with just $100,000.
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Suppose you’re willing to put in a bit more effort. In that case, you might consider adding some individual stocks to your portfolio, with dividend-paying stocks being particularly worthy of your attention. A $300,000 investment with an average dividend yield of 4% could yield $12,000 annually in dividends alone, along with potential stock price appreciation over time.
Growth stocks, which are associated with companies growing at a faster-than-average rate, present another potential road to riches, provided you diversify your investments. Lastly, value stocks, trading at lower-than-expected valuations, also offer a compelling approach for accumulating wealth. These strategies, among many others, offer potential pathways to a million-dollar retirement nest egg.
The $22,924 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years behind on your retirement savings. However, a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. Once you learn how to maximize your Social Security benefits, you could retire confidently with the peace of mind we’re all after. Simply click here to discover these strategies.
View the “Social Security secrets”
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Selena Maranjian has positions in Amazon and Apple. The Motley Fool has positions in and recommends Amazon, Apple, and Meta Platforms. The Motley Fool has a disclosure policy.
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