You don't need to develop a secret strategy to earn solid returns. The key is to target growth stocks.
Saving money and investing is no easy task right now. Rising costs make it difficult for many people to find ways to set money aside for their future.
But if you look for small wins and cost savings, they can still lead to a big financial payoff in the end. Whether it's cutting back on trips to the coffee shop, eating out less, or reducing other daily expenditures, saving and investing just $5 per day can potentially be enough to put you on a path to growing your portfolio to $1 million, if you do it over a long enough period like 30 years.
Through the benefits of compounding, I'll show you how you can make the most of any savings you may have with a reliable investment in the stock market.
Growth stocks make for the best long-term investments
If you want to make the most of your money and you're committed to leave it growing in the stock market for many years, then growth stocks are going to be your best options today. Dividend stocks can be excellent sources of passive income, but they're often better suited for investors who need more stability, such as retirees. While growth stocks can be volatile, they're more likely to generate market-beating returns in the long run.
Take the Invesco QQQ Trust (QQQ 0.98%) as an example. This exchange-traded fund (ETF) invests in the top 100 non-financial stocks on the Nasdaq exchange. It has a reasonable expense ratio of 0.2%, not a bad price given the upside it can offer investors through the world's top growth stocks. Whether you want to invest in Microsoft, Nvidia, Tesla, or other leading names, the fund has you covered. And as new growth stocks emerge and become more valuable, the Invesco QQQ Trust regularly rebalances its holdings.
Over the past 10 years, the fund has generated a total return (which includes dividends) of about 420%, versus just 220% for the S&P 500. That works out to an annualized return of 17.9%.
How $5 per day can grow to $1 million
If you put aside $5 per day, that's approximately $150 per month. And over the course of 30 years, you will have saved around $55,000 total. While that's a good chunk of change, it isn't $1 million or anywhere near it. The key is to invest those savings in a growth-focused ETF like the Invesco QQQ Trust.
Below is a table showing you how your balance could grow over a period of 30 years, assuming you invest $150 each month while earning an average annual return of 15%.
| Year | Balance |
|---|
| 5 | $13,500 |
| 10 | $41,800 |
| 15 | $101,500 |
| 20 | $227,400 |
| 25 | $492,600 |
| 30 | $1,051,500 |
Calculations by author. Balances rounded to the nearest hundred dollars.
In the early years, while your portfolio balance is fairly modest, the gains aren't significant. But toward the latter stages, your gains really begin to accumulate.
Your returns aren't guaranteed, but the strategy is a sound one
This level of gains, of course, is by no means guaranteed. Your rate of return will vary from year to year, and you have to reinvest the dividends you receive to maximize your long-term performance.
The Invesco QQQ Trust is also just one popular example of a growth fund you can invest in; there are many great ETFs out there that can help you grow your savings based on your needs and risk tolerance. The core lesson here is to save consistently, even a few dollars a day, and then invest that money to put yourself on the path to a sizable nest egg.
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft, Nvidia, and Tesla. The Motley Fool recommends Nasdaq and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
FAQs
If you put aside $5 per day, that's approximately $150 per month. And over the course of 30 years, you will have saved around $55,000 total. While that's a good chunk of change, it isn't $1 million or anywhere near it.
How much do I need to save to have 1 million dollars in 30 years? ›
For a rate of return of 5%, you'd need to save around $14,700 per month. As the table below illustrates, you could achieve your goal with a lot less saved per month if you already have a chunk of money saved up.
Is the Motley Fool worth it? ›
For those who need to stay informed and make informed investment decisions quickly, Moby is certainly worth considering, and for the legacy investors that just want the stock picks, you can't go wrong with Motley Fool Stock Advisor.
What stocks does the Motley Fool recommend? ›
The top 10 stocks to buy in September 2024
- CrowdStrike (CRWD 1.23%), $58 billion.
- PayPal (PYPL 0.01%), $66 billion.
- Airbnb (ABNB 1.16%), $72 billion.
- Shopify (SHOP 1.69%), $89 billion.
- MercadoLibre (MELI -0.53%), $96 billion.
- Walt Disney (DIS 1.49%), $156 billion.
- Intuitive Surgical (ISRG 0.09%), $165 billion.
Saving $13,000 would leave you with $3,000 a month to meet all your expenses—a perfectly reasonable number for many singles, and even some couples. Saving and investing $13,000 a month with a 10% annual return would allow you to become a millionaire in just over five years.
How many people have $1,000,000 in savings? ›
Employee Benefit Research Institute (EBRI) data estimates that just 3.2% of Americans have $1 million or more in their retirement accounts. Here's how much most Americans have saved and what you can do to boost your retirement savings. Don't miss out: Click to see our list of best high-yield savings accounts.
Can you retire on 1 million plus Social Security? ›
With cash, and assuming a 30 year retirement, you can expect to withdraw about $2,700 per month. ($1 million / 30 years = $33,333 / 12 months = $2,777) With your $2,500 in Social Security, this would give you about $5,200 per month to live on.
What is the average return on Motley Fool? ›
The average return of all 500+ Motley Fool Stock Advisor recommendations since the launch of this service in 2002 is 751% vs the S&P500's 161%. That means they are now beating the market by OVER 4X since inception. They have a win rate of 65% profitable stock picks.
How legitimate is The Motley Fool? ›
Motley Fool is definitely a legit investment-advice service that helps you stay on top of trends and conquer the market and it has helped me beat the market since I subscribed. But it's very important to have an understanding of the Motley Fool before signing up.
What's better than Motley Fool? ›
The best stock advice websites include Motley Fool Stock Advisor, Seeking Alpha, and Moby. These platforms offer in-depth stock analysis and investing research to help you make informed decisions.
The 4% rule assumes your investment portfolio contains about 60% stocks and 40% bonds. It also assumes you'll keep your spending level throughout retirement.
What stocks does the Motley Fool recommend for 2024? ›
The Motley Fool recommends Nu Holdings.
Is Motley Fool better than Morningstar? ›
If you want an exciting stock picking service that helps you build a portfolio of 10 or more stocks, The Motley Fool has you covered. Morningstar is the right choice for those who want a broader and more measured approach to picking their own investments.
How much to save to have $1 million in 30 years? ›
To save a million dollars in 30 years, you'll need to deposit around $850 a month. If you make $50k a year, that's roughly 20% of your pre-tax income. If you can't afford that now then you may want to dissect your expenses to see where you can cut, but if that doesn't work then saving something is better than nothing.
How much money do I need to invest to make $4000 a month? ›
Receiving $4,000 per month translates into an annual total of $48,000, excluding the need to pay any income taxes. With a 4% dividend yield, it'd take a required portfolio size of $1.2 million to make that cash flow of $48,000. Of course, having a higher dividend yield would mean less of a required nest egg.
How much to invest to be a millionaire in 30 years? ›
Assuming that you can earn this 10% average return over your investing career, if you are getting started investing this year and you want to become a millionaire in 30 years, you would need to invest $506.60 per month. This amount may seem like a lot, but it may actually be pretty doable for many people.
How much will $1 million be worth 30 years from now? ›
Given this, you plug a principal amount of $1,000,000, a rate of 3.18% and a time of 30 years into the compound interest formula. And voila, in 30 years the equivalent of $1,000,000 would be $2,557,794 and some change.
How long does it take to save $1 million dollars? ›
If you invest $1,000 per month, you'll have $1 million in 25.5 years.
| Monthly contribution | Time to reach $1 million with an 8% annual return |
|---|
| $500 | 33.3 years |
| $1,000 | 25.5 years |
| $2,500 | 16.3 years |
| $5,000 | 10.6 years |
1 more rowNov 20, 2023
Retiring at 65 with $1 million is entirely possible. Suppose you need your retirement savings to last for 15 years. Using this figure, your $1 million would provide you with just over $66,000 annually. Should you need it to last a bit longer, say 25 years, you will have $40,000 a year to play with.
