Want to Retire a Millionaire? This Simple Investment Strategy Might Be the Key

Hadisur Rahman, JadeTimes Staff

H. Rahman is a Jadetimes news reporter covering Business

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Image Source: Getty Images 

For many Americans dreaming of a comfortable retirement, the idea of becoming a millionaire might seem out of reach but it doesn’t have to be. Experts say one of the simplest and most effective ways to grow wealth over time is through dollar-cost averaging, a strategy that requires consistency, not complexity.

Rather than trying to time the market which even seasoned investors struggle to do dollar-cost averaging allows individuals to invest a fixed amount of money at regular intervals, such as monthly or per paycheck. This strategy ensures that investors buy more shares when prices are low and fewer when prices are high, helping to average out the purchase cost over time and reduce the impact of market volatility.

When paired with the right investment vehicles, such as exchange-traded funds (ETFs), dollar-cost averaging can be a powerful tool for building long-term wealth. ETFs offer instant diversification and are accessible even to those starting with small amounts.

How Much Could You Really Earn?

Thanks to the power of compounding, investing early even with modest contributions can lead to significant results. Consider this:

Investing $500 per month over 40 years at an average 12% annual return could yield nearly $5 million by retirement.

Starting later? Investing $1,000 monthly for 30 years could still generate around $3 million.

For those with a longer horizon and higher contributions say, $1,000 per month for 40 years the total could approach $10 million.

Top ETFs to Help You Retire Rich

To put this strategy into action, here are five top-performing ETFs to consider:

1. Vanguard S&P 500 ETF (VOO)

With a 12.8% return over the past decade, VOO offers exposure to 500 of the largest U.S. companies. It provides a balanced mix of growth and value stocks and is widely regarded as a benchmark for the U.S. market.

2. Vanguard Growth ETF (VUG)

This ETF focuses on large-cap growth stocks and tracks the CRSP US Large Cap Growth Index. It has delivered a 15.3% return over 10 years and offers a strong avenue for investors looking to tap into high-growth potential.

3. Invesco QQQ Trust (QQQ)

One of the best-performing ETFs of the past decade, QQQ tracks the Nasdaq-100, featuring the top non-financial companies listed on the Nasdaq. With an average 10-year return of 17.7%, it consistently outpaces the broader market.

4. Schwab U.S. Dividend Equity ETF (SCHD)

Focusing on high-yield, dividend-paying U.S. stocks, SCHD is a value-oriented fund with an average return of 10.6% over the past decade, and 12.2% since its inception in 2011. It’s ideal for investors who prefer income and stability.

5. ARK Next Generation Internet ETF (ARKW)

For those with a higher risk appetite, ARKW offers exposure to cutting-edge tech and innovation. It's actively managed and invests in sectors like big data, blockchain, and the Internet of Things. The ETF has returned an average of 18.2% annually over the past decade, though it is known for significant volatility.

Regardless of age or income level, starting early and staying consistent is key. While younger investors benefit most from compounding, it’s never too late to begin. Even modest investments can grow into substantial wealth if maintained over time.

“You don’t have to be rich to start investing but you do need to start investing to become rich.”

Geoffrey Seiler holds positions in Invesco QQQ Trust and Vanguard S&P 500 ETF. The Motley Fool recommends and holds positions in Bitcoin, Vanguard Growth ETF, and Vanguard S&P 500 ETF.