If you aim to become a millionaire by investing $1,000 a year in the S&P 500, you’ll need to start young and wait until your senior years to finally reach the milestone.
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A lot depends on how the S&P 500 performs in the future. But if the future mirrors the past, you can expect to wait more than half a century.
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Be Ready To Wait 50-Plus Years…
According to calculations from ChatGPT, it would take about 57 years of investing $1,000 per year in the S&P 500 at an 8% return to grow your investments to $1 million. The 8% figure was based on the S&P 500’s historical average of returning 7% to 10% a year after inflation. ChatGPT went with 8% as a “realistic” long-term average return.
The ChatGPT calculation aligns pretty closely with other online investment calculators. According to the Investor.gov compound interest calculator, you would have about $1.07 million after 58 years of putting $1,000 a year (or $83.33 a month) into the S&P 500 at an 8% average rate. After 57 years, you’d fall just short at a bit more than $988,500.
According to Calculator.net, it would take 56 years to pass the $1 million threshold with the same investment and return. Its calculation was based on investing the $1,000 on the first day of each year, meaning you’d get the full return for the full year.
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…Unless You Get a Better Return
The wild card is how much of a return you can expect to get from the S&P 500 during the years and decades ahead. Since the modern S&P 500 got its start in 1957 with 500 stocks, the average return has been about 8%, according to NYU Stern School of Business data cited by Carry.
However, recent averages have been higher, as shown here:
Past 10 years (2014 to 2024): 11.01% per year
Past 20 years (2004 to 2024): 8.87%
Past 30 years (1994 to 2024): 9.33%
Past 40 years (1984 to 2024): 9.83%.
A separate analysis from The Motley Fool, released in May, estimated that the S&P 500 has returned an average of 12.2% annually over the past decade. Historically, that’s a very high return — which means you might want to expect lower returns during the coming decade if the stock markets follow the usual patterns.
What If You Invest More Money?
Of course, if you have more than $1,000 to put into the S&P 500 every year, you’ll get to $1 million faster. For example, if you upped the amount to $2,000, you’d pass $1 million in 49 years at an 8% annual return, according to the Investor.gov compound interest calculator.
Here’s the timeline for other amounts:
$5,000: 37 years
$10,000: 29 years
$15,000: 24 years.
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This article originally appeared on GOBankingRates.com: If You Invested $1,000 a Year in the S&P 500, Here’s How Long It Would Take To Become a Millionaire
