While there’s no guarantee what your average annual return will be over the long term, targeting growth stocks can increase your chances of achieving big gains in the future.
Growing your portfolio to $1 million or more by the time you retire is a great goal. While there’s no magic number that will ensure you have enough money to maintain the lifestyle you want to enjoy in retirement, the key is to focus on growing your portfolio in a way that doesn’t waste your hard-earned savings. At risk. It might not reach $1 million, but it could end up being more.
Below we will show how it is possible to reach $1 million in different age groups. You don’t need that much money if you have plenty of time left to invest, but unless you’re approaching your 50s, you may not need to have six-figure savings either.
Growth stocks are best as long as you plan on investing for 10 years or more
Growth stocks are great investments to hold for the long term. Dividend and value stocks can be a low-risk option, but big returns that can significantly grow your portfolio can come from investing in strong growth companies.
However, they can fluctuate widely, so they are not ideal for investors who need to withdraw their funds in the short term. Investors need only look back to 2022, when rising interest rates caused tech and growth stocks overall to struggle. Invesco QQQ Trust (QQQ 0.61%) fell 33% on the year. But over the past five years, growth-focused exchange traded funds (ETFs) still delivered a 156% return.
QQQ data by YCharts
So for most long-term investors, the key should always be in growth stocks. Even if there are slow periods along the way, you can still get the best returns. Stocks can be a great investment as long as you don’t sell them in a hurry.
The Invesco QQQ Trust is an ideal ETF to own as its portfolio includes the top 100 non-financial stocks on Nasdaq, giving you exposure to the best growth stocks available on the market. The expense ratio is also quite low at 0.20%. Over the past 20 years, including dividends, the fund has generated an average annual return of 13.9%.
How much do I need to invest to reach $1 million?
Assume that investing in an Invesco fund yields an average annual return of 13%. This is slightly lower than the 20-year average. Based on that estimate, we’ll show you how much you need to invest now, depending on your age and your expectation of retiring at 65, for your portfolio to reach $1 million.
Age Number of years until retirement
investing today
30 35 $13,876 35 30 $25,565 40 25 $47,102 45 20 $86,782 50 15 $159,891 55 10 $294,588
Calculations by the author.
The actual returns you achieve may vary, but by investing the amounts listed above based on your age, you can put yourself in a good position to reach the $1 million mark in your portfolio by the time you retire. However, it is ideal to invest more if possible. Doing so can help your portfolio grow while also providing a buffer in case your actual annual return is less than 13%.
Invesco Funds are a great choice for all growth investors
Whether you save for the long term or not, putting money into ETFs like the Invesco QQQ Fund is a great way to diversify your holdings and stay invested in the market while reducing overall risk. It becomes. Even if you don’t know which stocks to invest in, the fund’s broad portfolio gives you exposure to many great growth stocks, increasing your chances of achieving big gains in the future.
