Indeed, it is possible to retire a millionaire with just ETFs alone, as long as you can manage your end-to-end financial plans the right way. You will need to start investing early enough, invest enough of your money in an aggressive enough plan, and convert some of that money to higher certainty options as your retirement nears. In a lot of ways, in fact, ETFs could make your investing job a little easier as you strive to have millionaire status by retirement.
Why ETFs are able to help you out
An ETF is really just a pre-designed assortment of investments. The main advantage of an ETF is that it provides a one-stop-shop to purchase multiple investments within its framework of the underlying strategy, many times with lower overhead costs. That allows you as an investor to focus on the overall strategies that you are interested in following, and then allow the ETFs do the work of choosing the specific investments for that strategy.
If you would like to get the longer-term benefits of investing without the effort or hassle of scouring your financial statements to attempt to separate the losers from the winners, ETFs could be a great tool to have in your arsenal.
How long can it take for you to get there?
The more money you can put away and the higher the rate of return you can earn, the less time it will take to become a millionaire.
Over a long time period, the stock market has delivered yearly returns somewhere between the 8% to 10% levels, although those returns are not guaranteed. That makes market tracking ETFs a great tool to use for the long term to try and reach millionaire status.
Your monthly investment amounts are based on maxing out your IRA and 401(k) contributions for the entire year. In particular:
- $2,833.33 would max out both an IRA and a 401(k) for an investor that is 50 and older. The yearly limits in that age group are $7,000 for IRA contributions and $27,000 for 401(k) contributions.
- $2,250.00 would be a max for a 401(k) contribution for an investor who is age 50 or over.
- $2,208.33 would be a max for both an IRA and a 401(k) for an investor who is younger than 50. The yearly limits in that age group are $6,000 for IRA contributions and $20,500 for 401(k) contributions.
- $1,708.33 would max out the 401(k) contribution for an investor who is younger than 50.