Does a millionaire need the S&P 500 to retire?


Retiring a millionaire may seem like something reserved for the super-rich. But with the right investment you can earn more than you think.

Saving for retirement is difficult, especially when the stock market is volatile. It can also be difficult to separate good investments from bad ones when stock prices are down, and it’s tempting to avoid the market altogether.

However, there is one type of investment that is safe, requires very little effort, and can help you retire a millionaire: S&P 500 ETFs.

A person holding several hundred dollar bills.

Image source: Getty Images.

What is an S&P 500 ETF?

The S&P 500 itself is a stock market index that includes the stocks of the 500 largest and strongest companies in the United States — think household names. the amazon, appleAnd Microsoft.

You can’t invest in the index itself, but you can invest in an exchange-traded fund (ETF) that tracks it. That’s where the S&P 500 ETF comes in This fund includes the same stocks as the index and aims to mirror the performance of the index over time

Investing in the S&P 500 ETF has several advantages, including:

  • Instant Diversification: Each ETF includes stocks of 500 companies across a variety of industries, and that diversity can help limit your risk. Even if some stocks don’t perform well, it won’t sink your entire portfolio.
  • Protection against volatility: No investment is immune to short-term volatility, but the S&P 500 itself has a perfect track record of recovering from recessions. Regardless of what the market has in store, it’s highly possible that the S&P 500 (and S&P 500 ETFs) will be able to rebound.
  • Positive long-term returns: Despite all the short-term ups and downs, the S&P 500 has historically achieved positive returns. In fact, since 2000, it’s up more than 176% — despite experiencing the dot-com bubble burst, the Great Recession, the COVID-19 crash, the current recession, and numerous minor corrections along the way.

There are no guarantees when investing in the stock market, but the S&P 500 ETF is one of the safest options. And with the right strategy, they can also help you earn a lot of money.

How to Retire a Millionaire

By investing consistently and giving your money plenty of time to grow, you can accumulate $1 million or more.

Historically, the S&P 500 itself has achieved an average rate of return of about 10% per year. This does not mean that you will earn 10% returns year after year, but rather that all annual returns will be around 10% per year over the long term.

Assuming you’re getting a 10% average annual return, here’s how much you’ll need to invest each month to retire a millionaire, depending on how many years you have to save:

number of years Investment amount per month Total savings
20 $1,500 $1.031 million
25 $850 $1.003 million
30 $525 $1.036 million
35 $325 $1.057 million

Data source: Author’s calculations via

It’s never too early to start saving for retirement, and the sooner you start, the less you’ll need to invest each month to retire a millionaire.

Also, while waiting decades to build a million-dollar portfolio, remember that S&P 500 ETFs are hands-off investments. You don’t have to research companies, pick individual stocks, or keep up with market movements. Invest what you can afford and wait for your money to grow.

Consider the downside

S&P 500 ETFs have many advantages and are a smart option for many investors. However, they have their downsides.

If you want to take a more active role in your portfolio, for example, an S&P 500 ETF may not be the best fit. With this investment, you don’t get to choose which stocks to buy, as you automatically own a stake in all companies within the S&P 500. If there are certain stocks you want to avoid, that’s not possible with an S&P 500 ETF .

Additionally, the S&P 500 ETF cannot beat the market. They are planning following market, so all they can do is average income. For many people, the simplicity of an S&P 500 ETF outweighs the low yield. But if you want to maximize your earnings, individual stocks are the way to go.

Retiring a millionaire is not easy and requires the right strategy and long-term perspective. But S&P 500 ETFs can help you protect your savings while making a lot of money.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors of The Motley Fool. Katie Brockman has no positions in the stocks mentioned. The Motley Fool has positions and recommends, Apple and Microsoft. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. Motley Fool has a revealing policy.


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