Investing in the USA: Reaching $10 Million

Investing Smartly: Achieving $10 Million in the USA 💰

From a young age, I recognized the potential of investing in the U.S. market, believing it to be one of the most straightforward routes to wealth. Today, let’s delve deeper into reaching the remarkable milestone of $10 million through systematic investing. For the average person, finance provides one of the greatest powers—compound interest over time, which is available to everyone equally.

Investment Strategies: Balancing the S&P 500 and NASDAQ 📈

Building on previous discussions, I propose a simple strategy: invest half in the S&P 500 and half in the NASDAQ index. Let’s explore how an everyday investor can approach the goal of $10 million.

Understanding the Indexes

The S&P 500 serves as a cornerstone of the U.S. economy, representing crucial industries such as technology, finance, healthcare, industrials, and consumer goods. One impressive characteristic of the S&P 500 is its ability to eliminate underperforming companies swiftly. Even during extreme market conditions, this index tends to rise more than it falls.

On the other hand, the NASDAQ 100 has experienced significant growth due to global technological advancements, boasting an impressive average annual return of over 17%. However, it’s worth noting that it also encounters deeper downturns compared to the S&P.

Historical Performance of Both Indexes 📊

Let’s analyze how these two indexes have performed over nearly 30 years, from early 1995 to late 2023. Throughout this period, we’ve witnessed several significant events, including the dot-com bubble, the global financial crisis, and the COVID-19 pandemic. Despite these tumultuous times, the annualized return of the S&P 500 has comfortably exceeded 10%, while the NASDAQ 100 has achieved a remarkable annualized return of 13%.

When we apply a straightforward investment strategy of 50% in the S&P and 50% in the NASDAQ, we can estimate a long-term annualized return of approximately 11.5% for the combined portfolio.

Calculating Your Path to $10 Million 💸

So, how can an ordinary individual harness this strategy to reach the $10 million goal? The key factors are consistent monthly investments and perseverance over the long haul.

Investment Scenarios

Assuming an annualized return of 11.5%, here’s what it looks like to reach $10 million under different investment scenarios:

• Investing $3,000 monthly: Around 35 years, with a total principal investment of $1.26 million.
• Investing $5,000 monthly: About 30 years, with a total principal of $1.8 million.
• Investing $10,000 monthly: You’ll need just 24 years, with a total principal investment of $2.88 million. Thumbs up to you! 👍

Executing the Investment Strategy

The easiest way to implement this strategy is by purchasing low-fee ETFs that track these two indices (which is what I personally use). Many platforms and brokers offer funds that follow these benchmarks, enabling you to set up automatic monthly investments easily.

Important Considerations for Future Growth 🤔

At this point, you might wonder why these indices can maintain a compound annual growth rate exceeding 10% over the next several decades. This is a critical question worth considering. Here are three essential reflections inspired by Warren Buffett’s investment philosophy:

1. Do you believe that the USA will continue to hold a pivotal position in the world for decades to come?
2. Do you trust that the companies represented in these indices will continue to deliver goods and services that humanity needs broadly?
3. Do you have confidence that these companies will remain leaders in their respective industries over the long term?

Reflecting on these three strategic issues can guide your understanding of why I believe in a 10% long-term compound return over the next 30 years. Due to space limitations, I will elaborate on this in our next discussion!

Conclusion

In summary, investing wisely in the S&P 500 and NASDAQ can provide anyone with a path to achieving significant wealth. With consistent contributions and patience, you can unlock the door to financial freedom. Let’s embark on this journey together and create a more prosperous future! 🚀