Is it the S&P 500 you need to retire a million people?

Targeting millionaire status before your 65th birthday? Depending on how old you are today, the S&P 500 it’s probably all you need to get there.

The S&P 500 is a basket of the largest public companies in the US. These 500-plus groups together make up about 80% of the total stock market value. As such, they drive much of the performance for the market as a whole. That’s why when someone says, “The market went up 5% today,” it often means in particular that the S&P 500 went up 5%.

Now let’s get back to your millionaire goal. The S&P 500 has three features that make it an ideal anchor for your retirement care. Initially, it has multiplied. Holding hundreds of different stocks spreads your risk so you don’t rely on any of them.

Financial strength, proven business models

Second, the companies in the S&P 500 have financial strength, proven business models, experienced leaders, and loyal customers. If you use products or services from Apple, Amazon, Visa, no American Express consistently, you are one of those loyal messengers.

These are the features you want in your retirement package. That account could be with you for 60 years or more, so you need companies that you can keep safely for a long time.

Strong growth in the long run

The third feature, however, is the weaver. The long-term average annual growth rate of the S&P 500 is around 7% after inflation. At that point, you can reach millionaire status in 30 years by investing around $ 880 per month, including your employer’s matches. If you earn a U.S. median salary of $ 53,508 for employees over 24, you could cover that monthly contribution with a 15% pay delay and 5% employer matches.

That might sound like a stretch right now, but here’s a little look. To reach the million dollar mark in a high yielding savings account earning 0.55%, you had to deposit $ 2,500 per month for 30 years. That’s really just an option for someone who makes six figures and has low living costs.

You can also ride the S&P 500 to millionaire status even if your retirement timeline is less than 30 years. It will take higher monthly donations, but you can use a few tricks to make it easier. First, skim your family spending and use the savings to maximize your contributions. Second, invest in a tax-beneficial account, such as a 401 (k) or HSA with an employer match. Third, make sure you reinvest any shares. And finally, increase your contributions every time you receive a raise or windfall.

Regulating the volatility

Before you invest your last dollar in the S&P 500, know that the index can be volatile in shorter periods. Volatility will cost you nothing, unless you have to sell your stock when share prices are down. You can mitigate that risk in two ways. One, keep an emergency account with enough money in it to cover at least three months of your living expenses. And second, don’t invest money you might have in the next five years.

How to invest in the S&P 500

You can invest directly in the S&P 500 by purchasing each 500-plus index member. But the easiest way is to buy a low priced S&P 500 ETF instead. You will incur financing costs in this way, but it is far more effective to manage one situation against hundreds. In addition, if you choose the right fund, these costs will be less than 0.05% of your investment capital.

The table below shows key metrics for three S&P 500 index funds.

Table data database: Vanguard, iShares, SSGA

You are probably wondering what will bring with you the average results above 13%. Over the last 10 years, the S&P 500 has grown 13.43% year-on-year, well above its long-term average. While that growth trend is miraculous, it does not make sense to assume that it will continue indefinitely. You’re better off designing more conservative, and then identifying whether your retirement account is performing better than the plan.

Cyclists on the market

By investing in the S&P 500 you can retire a million people. That holds true even if you stretch today to put in a few hundred dollars a month. What matters now is a shift in millionaire leadership. You can always find ways to increase your contribution over time.

And who knows? The market is likely to continue its unusually strong performance. If it does, you will want to be there to reap the benefits.