The idea of building a $1 million portfolio might sound more daunting than climbing Mt. In reality, it's more achievable than you probably think. With enough time, discipline, and the right mix of investments, the long-term power of compounding can get you to the $1 million mark and beyond!
Just take a look at history. If you invested $10,000 in the S&P 500 (SNPINDEX: ^GSPC) at the beginning of 1996, it would have grown to roughly $214,000 with dividends reinvested. Now, that's clearly not $1 million, but that's how large it grew with a one-time investment.
Imagine how big it could get if you added a modest monthly investment to it over all those years. Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005.
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Over the past century, the S&P 500 has returned around 10% annually. The index has performed much better than that over the past decade, but the next decade could very well be much worse. When projecting long-term returns, it's better to be a little more conservative.
Let's assume that an investor earns an 8% average annual return and chooses to make regular monthly investments via a 401(k) or another systematic investing plan. Assuming they're starting from zero, here's approximately how much it would take over time to accumulate $1 million. Data source: Investor.gov.
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