It is easy to fall into the trap of thinking that getting rich on the stock exchange is possible only for those who are already rich. Or it is easier to create wealth when there is a lot of money to invest, you do not have to be rich to become a stock market millionaire.
In fact, you do not even have to be an experienced investor. Investing is a very important way to maximize your income potential, but it is easier than you think to retire the rich. By investing just a few hundred dollars a month in this particular ETF, you can one day become a multimillionaire.
Where to invest your money?
You have countless options when it comes to where to invest. One of these options is exchange rates or ETFs.
An ETF is a group of shares consolidated into a single investment. So when you invest in just one ETF, you are immediately investing in hundreds or even thousands of different stocks. This will help you to diversify your portfolio և reduce your risk.
There are many different ETFs to choose from, but it is a solid option Vanguard S&P 500 ETF: (NYSEMKT: VOO)“This fund lags behind the S&P 500 index, which means that it includes the same stocks as the index reflects its performance.”
The S&P 500 is one of the best representations of the stock market as a whole, which can further limit your risk. The stock market is prone to instability, but has a long history of recovering from accidents and corrections. As this ETF lags behind the market, it is very likely that it will also recover from the downturn.
In addition, by investing in the S&P 500, you are buying from some of the largest and most successful companies in the United States. Some of the biggest names in the S&P 500 include: Apple, Microsoft:, Alphabet:, Amazon:, և: Facebook:,
Becoming a multimillionaire
No matter where you invest, your exact income will vary depending on the market. However, since its inception, the S&P 500 has generated an average annual revenue of 10%.
This does not necessarily mean that with this investment you will receive 10% of your annual income. Last year, for example, the Vanguard S&P 500 ETF gained more than 40%. There will be other years when you will have much lower returns or even losses. Over time, however, these annual incomes should average about 10% per year.
Say you are just starting to invest, investing $ 400 a month while earning an average annual income of 10%. In 40 years you will have about $ 2.124 million.
Of course, 40 years is a long time to invest. If you do not have enough time to save, you need to increase the amount invested every month. For example, if you have only 35 years to save, you need to invest about $ 650 a month to save at least $ 2 million.
On the other hand, if you can keep your money invested for more than 40 years, you do not need to save that much money every month to become a multimillionaire. After investing for 45 years, for example, you need to save just over $ 225 a month to reach $ 2 million in total savings.
It takes time to get rich on the stock market, investing in the Vanguard S&P 500 ETF can help you reach your goal. By simply investing backwards and giving your money as much time as possible to grow, you can earn more than you think.
This article presents the opinion of a writer who may disagree with the position of the “official” offer of Motley Fool Premium Consulting. We are motley! Investigating an investment thesis, even our own, helps all of us think critically about investing, making decisions that will help us become smarter, happier, and richer.