As of 2022, the median retirement savings balance among Americans ages 65 to 74 was only $200,000, according to the most recent data from the Federal Reserve. If you want to retire with a lot more money than that, then it’s important to choose the right investments.
You could put together a portfolio of individual stocks to meet your retirement savings goals. But that could mean having to research many different companies and keep track of their performance over time.
An easier approach to retirement investing may be to put your money into exchange-traded funds, or ETFs. And if your goal is to retire a millionaire, here are three ETFs you may want to make room for in your portfolio.
1. The Vanguard Total Stock Market ETF (VTI)
The Vanguard Total Stock Market ETF (VTI) tracks the total stock market, as the name implies. This means you get the stability of larger, established businesses as well as the potential upside of smaller-cap companies.
You’ll often hear about the importance of diversification in the context of investing. VTI makes that really easy, since, you’re basically putting your money into the stock market as a whole.
2. The Vanguard S&P 500 ETF (VOO)
The Vanguard S&P 500 ETF (VOO) tracks the S&P 500 index, which consists of the roughly 500 largest publicly traded companies by market capitalization. As is the case with VTI, you get nice diversification with VOO.
However, you should know that with VOO, you’ll miss out on smaller company growth, since you’re only putting money into S&P 500 companies. That said, if you don’t want to deal with the volatility that comes with investing in small-cap companies, VOO may be a suitable investment for you.
3. The Schwab US Large-Cap ETF (SCHX)
The Schwab US Large-Cap ETF (SCHX) tracks the Dow Jones U.S. Large-Cap Total Stock Market Index, which includes the largest 750 U.S. companies by market capitalization. While it’s by no means a risk-free investment, you’re basically avoiding the volatility that comes with investing in small-cap stocks.
As you might imagine, there’s a good deal of overlap between SCHX and VOO. However, with SCHX, you get exposure to more stocks.
The key to retiring a millionaire goes beyond the ETFs you choose
It’s definitely important to choose ETFs for your retirement portfolio that fit your long-term strategy. But if you want to retire a millionaire, it’s important to do a few things:
- Start investing at a young age
- Increase your savings rate as your financial situation allows
- Stay consistent, and don’t rush to unload investments when the market takes a tumble
The good thing about all of the ETFs above is that they have relatively low expense ratios, so you don’t have to worry too much about fees eating into your portfolio’s performance. They’re also easy investments to track and offer a nice amount of diversification.
If you invest in any or all of these ETFs for decades, you may find that by the time retirement arrives, you’re easily sitting on $1 million or more.
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