You don’t have to start investing super early to end up with a big nest egg.
Many people can’t afford to start investing early in life. But it doesn’t mean that if you start later, it’s too late to invest and that you can’t end up with a great retirement fund. Also, as you advance in your career, wages should increase, and there’s the potential to invest more (on a monthly basis) than if you had started years earlier. So you may not be at a huge disadvantage.
Below, I’ll show you how much you would need to invest each month if you’re 40 years old or have 25 investing years until retirement in order to end up with a portfolio worth at least $1 million.
Investing more money can make up for lost time
When you’re saving and investing for the long term, there are three important variables to consider: time, money, and risk. For example, you can make up for having less time by investing more money and/or by taking on a bit more risk. In an extreme situation where you don’t have many investing years left or much money to invest, the only lever you can pull is risk, which clearly isn’t ideal when you’re talking about retirement.
But if you’ve got 25 investing years left, you still have plenty of time. The S&P 500 has averaged a long-run return of approximately 9.7%. If you were to generate that kind of return over a period of 25 years, an investment could grow to 10 times its value. That would mean investing $100,000 could potentially turn into $1 million with a fairly safe investment that mirrors the market.
Top growth funds can make the most of your money
You can accelerate your returns by investing in a potential market-beating investment, such as the Invesco QQQ Trust (QQQ 0.59%). The exchange-traded fund (ETF) gives you exposure to the Nasdaq-100 index, which includes the largest non-financial stocks on the exchange. Its top holdings include such big names as Apple, Microsoft, Nvidia, and other stocks that will be familiar to tech investors.
In 10 years, the fund has generated total returns (including dividends) of 473%. That averages out to a compound annual growth rate of 19%. But for the sake of being conservative, let’s assume that you will average a smaller return, but one which would be modestly higher than the S&P 500’s gains.
Here’s a breakdown of just how much you would need to invest per month at different growth rates, assuming that you have 25 years to go until retirement:
| Growth Rate |
Monthly Payment |
|---|---|
| 10% | $753.67 |
| 11% | $634.46 |
| 12% | $532.24 |
| 13% | $445.02 |
| 14% | $370.94 |
| 15% | $308.31 |
Calculations by author.
As you can see, there’s definitely an incentive to target a potentially market-beating fund rather than just mirroring the index. While the S&P 500 can offer some stability and safety, by taking on a bit more risk and investing in a tech-heavy fund like the Invesco ETF, you may require smaller monthly payments.
Returns are never guaranteed, of course, but by focusing on the top tech and growth stocks on the Nasdaq, that’s a reasonable risk to take on — and the benefits for your portfolio can be significant.
Investing is never a bad idea, regardless of your age
Your investing strategy may change over time, but there are so many stocks and ETFs to invest in which can give you plenty of options to choose from. If you’ve started early, you can take on a bit more risk and focus heavily on growth stocks and tech. If you’re closer to retirement, then safe blue chip stocks which pay dividends may make a lot more sense.
But the key thing is to try and save and invest money on a regular basis. Even in retirement, stocks can be valuable sources of recurring dividend income.
And there’s the potential that an investment does better than you expect, which is why it’s generally a good idea to invest in quality stocks. While not every year may be a good one for the markets, in the long run, good, quality investments will rise in value.
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends Nasdaq and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.