In this era where money seems to lose value over time, increasing assets through investments like VOO, QQQ, and other ETFs is crucial.
If you’ve managed to save $500 every month, you might wonder how long it will take to reach $100,000 through investing in VOO.
Therefore, I’ll guide you step by step, using a list format, to understand the time it will take to achieve your first $100,000. I’ll also highlight important considerations and suggest ways to improve your strategy.
Finally, I’ll share my own approach to give you a more comprehensive understanding.
Let’s get started!
How to Capture the Rate of Return for VOO?
The first step is to determine how we will capture the annualized rate of return.
Here, I’ll start by listing the latest return rate statistics（compiled from the VOO official website, up to March 31, 2024)）：
| YTD | 1-yr | 3-yr | 5-yr | 10-yr | Since inception from 2010 |
| 10.45% | 29.83% | 11.42% | 15.00% | 12.91% | 14.44% |
Usually, longer periods provide more stable trend developments, and the numbers tend to be more accurate. Therefore, we’ll use the return rate since inception, which is 14.44%.
How much will the cumulative amount be after investing?
Here, we assume you start from scratch and make an initial investment at the beginning of each year. Therefore, the changes for each year are as follows:
| Years | Accumulated cost | Accumulated Value |
| 1 | 0 | 0 |
| 2 | 6,000 | 6,866 |
| 3 | 12,000 | 14,724 |
| 4 | 18,000 | 23,717 |
| 5 | 24,000 | 34,008 |
| 6 | 30,000 | 45,785 |
| 7 | 36,000 | 59,263 |
| 8 | 42,000 | 74,687 |
| 9 | 48,000 | 92,338 |
| 10 | 54,000 | 112,538 |
If you follow this pace, you can smoothly achieve this goal by the 10th year.
Is it really that smooth? Consider these risks.
However, keep in mind that these results are based on calculations and do not necessarily reflect the actual progress. In reality, you must also consider the following real risks:
There may be a possibility of encountering a stock market crash, which could drag down your performance.
After you start investing VOO, you are bound to experience various ups and downs, and in more severe cases, you might even face a stock market crash, adversely affecting the performance of your assets.
If you encounter VOO downturns like those in early 2020 or throughout 2022, as highlighted in the two red boxes in the image below, it’s highly likely that your previously positive returns could turn negative, leaving you with a feeling of having worked in vain.
Typically, when faced with such situations, all you can do is accept it with resignation and patiently endure through it.
You’re too indecisive, investing in VOO while also considering other options.
Another risk is being too indecisive, wanting to invest in this and that, dabbling in everything, not only VOO.
Having such thoughts often stems from constantly following news media reports, discussions on Reddit, Instagram, or TikTok, or being influenced by influencers. Even your friends and family may keep saying, “This stock is good,” or “This one should make a lot of money,” leading to an ever-expanding portfolio that significantly impacts your original performance.
You run out of money halfway through your investment.
The final risk is finding yourself halfway through your investment journey in VOO and realizing you’ve run out of funds.
In most cases, unexpected expenses arise suddenly, such as medical bills, emergency household needs, or being laid off from work. As a result, you must prioritize saving and can’t continue investing.
However, it could also simply be overspending, such as encountering difficult clients at work and wanting to blow off steam with a night out, indulging in consumerism, or having weak impulse control, leading you to swipe your card for things you like. In such scenarios, it’s easy to find yourself short on cash, causing your investment to come to a halt.
To achieve success, you must do the following
You’ve seen that there are so many uncertainties, but you still need to invest in VOO, so what should you do?
Therefore, you must ensure you do the following five things well to increase your chances of success:
Continuously invest with regular contributions and stay focused.
The first thing is to invest continuously through regular contributions in VOO, and to stay focused.
The previous calculations were based on making an initial investment at the beginning of each year, which stretches out the investment period. However, if you switch to investing a fixed amount monthly in VOO, you can gradually benefit from the rising stock prices, thereby shortening the time to reach your goal.
Moreover, once you start investing, concentrate on this task and avoid being swayed by others saying things like “this stock is a great earner” or “everyone is buying, so I should too.” From my observations, such actions easily drag down your performance and could even lead to losses.
Reinvest the dividends received.
The second thing is to reinvest the dividends you receive.
Although the dividends issued by VOO are minimal, just a small fraction, and they are subject to a 30% tax deduction, don’t underestimate the significance of these dividends. By reinvesting them, they become a part of your assets and can still contribute to the growth of your portfolio through stock price appreciation.
Many times, wealth is accumulated through the compounding effect of these small amounts of money.
Extend the expected investment period
The third thing is to extend your investment horizon.
Referring back to the investment period chart, although it may seem possible to achieve your goal in 10 years, as mentioned earlier, you cannot predict when a crash or correction might occur. If you rigidly adhere to the initial timeframe, the pressure on you will be substantial.
Therefore, you can extend the investment period, such as to 15 or 20 years, or even refrain from setting a specific duration, allowing yourself more flexibility. Even if you reach your goal, you may continue investing out of habit, gradually increasing your assets over time.
Be a bit more confident
Lastly, give yourself more confidence.
I understand that many people have doubts in the early stages of investing, and even into the mid-term, continually questioning, “Can I really achieve my goals by doing this?” In more severe cases, unexpected corrections, perhaps around 5% to 10%, can cause fear, leading to hesitancy in continuing investments.
This is entirely normal. Even after investing for so long, I still experience such thoughts.
Therefore, remind yourself from time to time that you are already on the path to your ideal future, and someday you will surely achieve it. There’s no need to give up now because “if you give up now, the game is over.”
If it were me, here’s what I would do…
But after talking so much, I’m afraid you still might not fully grasp it, so let me tell you what I would do!
Firstly, I would choose a brokerage firm to set up automatic monthly contributions. Once I’ve set it up on the app, I would ensure there’s enough money in my account each month for the deduction.
Next, I would delete all the finance channels I used to follow, influencers, and discussions, reducing the chances of being influenced.
Mentally, I would try not to stress too much. Therefore, I wouldn’t insist on achieving my goals within a specific timeframe. Just continue doing what I’m doing now, and eventually, I will reach my goals.
Lastly, I would focus on my work, continuously improve myself, and seek opportunities to increase my income, allowing me to invest more. I would also ensure to live a fulfilling life without being bound by this matter, avoiding unnecessary stress in my life.
Why don’t you give it a try too?