How much would I make if I invested in S&P 500?
The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31st 2023, had an annual compounded rate of return of 15.2%, including reinvestment of dividends.
Historically, though, the S&P 500 has earned an average rate of return of around 10% per year. This means that while you likely won't earn 10% returns year after year, all of the annual ups and downs should average out to roughly 10% annually over decades. Data source: Author's calculations via Investor.gov.
For instance, say your investments are earning a 12% average annual return compared to 10% per year. If you're still investing $100 per month, you'd have a total of around $518,000 after 35 years, compared to $325,000 in that time period with a 10% return.
Assuming an average annual return rate of about 10% (a typical historical average), a $10,000 investment in the S&P 500 could potentially grow to approximately $25,937 over 10 years.
S&P 500 annual returns
Over the past 30 years, the S&P 500 index has delivered a compound average annual growth rate of 10.7% per year. Data source: Slickcharts.com.
There's no easy way of turning $1,000 into $10,000. The average stock market return is about 10% per year, according to SmartAsset. At that rate it would take 24 years to amass $10,000. You can speed up the process by adding to your original investment.
Does the S&P 500 Pay Dividends? The S&P 500 is an index, so it does not pay dividends; however, there are mutual funds and exchange-traded funds (ETFs) that track the index, which you can invest in. If the companies in these funds pay dividends, you'll receive yours based on how many shares of the funds you hold.
A well-constructed dividend portfolio could potentially yield anywhere from 2% to 8% per year. This means, to earn $3,000 monthly from dividend stocks, the required initial investment could range from $450,000 to $1.8 million, depending on the yield. Furthermore, potential capital gains can add to your total returns.
The truth is that most investors won't have the money to generate $1,000 per month in dividends; not at first, anyway. Even if you find a market-beating series of investments that average 3% annual yield, you would still need $400,000 in up-front capital to hit your targets. And that's okay.
Those who are able to save a significant amount beyond their retirement account contributions may be able to generate $200 monthly in interest. “If you have $50,000 in a high-yield savings account offering 5% APY, that's $200 a month right there,” Henry says.
How long does it take to become a millionaire with S&P 500?
All that matters is how patient you are and which S&P 500 stocks you buy. Even if you only have $1 and never invest another penny, you can be a millionaire in 30 years. It's just that you'd need to hit a home run S&P 500 stock — which returns at least 58.5% — each year. That's a tall order, yes.
Investment Return | Future Value of 200,000 in 10 Years |
---|---|
9.25% | 484,445 |
9.5% | 495,646 |
9.75% | 507,079 |
10% | 518,748 |
So if you're happy with a portfolio that performs comparably to the stock market as a whole, then sticking to S&P 500 ETFs alone isn't a bad idea. However, if you assemble a portfolio of individual stocks that perform better, you might enjoy a 12% or 15% return over time -- or more.
Basic Info. S&P 500 Monthly Return is at 1.59%, compared to 4.42% last month and 6.18% last year. This is higher than the long term average of 0.54%.
You can become a millionaire by investing $500 per month consistently for almost 30 years. This is a low-effort strategy, but you can achieve this goal even faster through the right combination of individual stocks. Should you invest $1,000 in Vanguard S&P 500 ETF right now?
Once you have $1 million in assets, you can look seriously at living entirely off the returns of a portfolio. After all, the S&P 500 alone averages 10% returns per year. Setting aside taxes and down-year investment portfolio management, a $1 million index fund could provide $100,000 annually.
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If you're saving $10,000 a year and have an additional $7,100 you can put into savings, Singh said a high-yield savings account with a 4% interest rate could take you to $100,000 in 10 years.
Stock | Implied upside from Jan. 5 close |
---|---|
Amazon.com Inc. (AMZN) | 23.9% |
Nvidia Corp. (NVDA) | 22.2% |
Meta Platforms Inc. (META) | 10.8% |
Tesla Inc. (TSLA) | 26.3% |
The key to keeping your money safe
While there are never any guarantees when it comes to investing, opting for an S&P 500 index fund or ETF is about as close to guaranteed long-term returns as you can get. It's not the only way to build wealth in the stock market, however.
How often does S&P 500 pay out?
The SPDR S&P 500 ETF, which trades under the ticker SPY, is the oldest and biggest ETF to track the S&P 500, with about $425 billion in assets under management. It's administered by State Street Global Advisors. It pays a dividend quarterly and had a yield of about 1.3% as of November 2021.
Since hitting a low in October 2022 while the Federal Reserve was aggressively hiking interest rates, the stock market has come roaring back. The S&P 500 is up 21% in the last 12 months, as investor sentiment is very positive.
If you can invest $200 each and every month and achieve a 10% annual return, in 20 years you'll have more than $150,000 and, after another 20 years, more than $1.2 million. Your actual rate of return may vary, and you'll also be affected by taxes, fees and other influences.
While you might be kicking yourself for not starting to invest sooner, you're definitely not alone. In fact, according to a recent Gallup Poll, 28% of Americans don't start investing until their 30s. That's over 1 in 4 people. The fact is, getting started investing in your 30s isn't a bad thing.
Let's say you want to become a millionaire in five years. If you're starting from scratch, online millionaire calculators (which return a variety of results given the same inputs) estimate that you'll need to save anywhere from $13,000 to $15,500 a month and invest it wisely enough to earn an average of 10% a year.