Could Investing $50,000 Into S&P 500 Index Funds Be Enough to Get Your Portfolio to $1 Million by Retirement?
Investing in index funds can be an effective way for investors to diversify and track the overall market.
Overview
The old adage that you need money to make money is true, as the benefits of compounding are greater when an investment balance is large. Consider that the S&P 500 (SNPINDEX: ^GSPC) has averaged an annual return of 10% for decades. That means an investment might, on average, double after just over seven years. But if someone were to invest $1,000, the gain would be much more modest than if they invested $10,000 or $50,000.
That's why there's a strong incentive to invest a large lump sum for those who can afford to do so. Below, I'll look at whether a $50,000 investment in S&P 500 index funds today could grow to $1 million or more by retirement.
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Originally published at www.fool.com.