In this era, accumulating tens of thousands through investments might not be difficult, whether it’s through short-term trading of individual stocks or through regular investments in VOO and QQQ, which are popular methods nowadays.
But what about aiming for $1 million? Does that pose a significant challenge?
You might think, if achieving it with VOO alone is feasible, then it should be possible with just QQQ, right?
So, let’s do some calculations to see how long it would take to accumulate $1 million solely through investing in QQQ. Additionally, to actually achieve this goal, what factors do you need to carefully evaluate, and what actions must you take? Finally, I’ll share some of my insights.
Let’s get started!
How should we track the returns of QQQ?
The first thing is to decide on the rate of return we want to use.
As of March 31, 2024, according to the statistics from the QQQ official website, the returns for different periods are summarized as follows (statics may differs when data has update):
| YTD | 1-Yr | 3-Yr | 5-Yr | 10-Yr | Since inception in 1999 |
| 8.66% | 39.32% | 12.40% | 20.65% | 18.60% | 9.71% |
Here we will use the annualized return rate of 9.71% since inception to calculate. The reason is that the longer the period, the more stable the trend development, and the numbers are relatively more accurate.
How much do I need to invest each month?
Next, we need to determine how much we need to invest in QQQ each month, as this is a key factor in determining whether we can accumulate 1 million.
Below are different monthly investment amounts. Based on the previously calculated rate of return, we can see how much assets will accumulate at different investment timeframes (the left column indicates the number of years it takes to accumulate 1 million for different investment amounts):
| Years Need | 500 | 1000 | 1500 | 2000 | 3000 | 5000 |
| 11 | 109,462 | 218,924 | 328,386 | 437,848 | 656,771 | 1,094,619 |
| 15 | 186,307 | 372,614 | 558,921 | 745,229 | 1,117,843 | |
| 18 | 265,823 | 531,646 | 797,469 | 1,063,292 | ||
| 21 | 370,824 | 741,648 | 1,112,472 | |||
| 24 | 509,478 | 1,018,955 | ||||
| 31 | 1,031,068 |
For convenience in calculation, the algorithm used here involves accumulating funds until the beginning of the next year for a single investment. For example, the money saved in the first year will be invested entirely at the beginning of the second year, and so on.
If we consider QQQ’s the longest-term annualized rate of return at 9.71%, even if you invest $5000 per month in QQQ, it will still take 11 years to accumulate 1 million. For investment amounts ranging from $2000 to $3000 per month, it will take at least 15 to 18 years to achieve this goal. If you can only invest less than $2000 per month, I’m sorry, it will take at least 20 years.
If you only plan to invest tens or hundreds of dollars per month and still aim to accumulate 1 million, you may need to wait until middle age or even close to retirement to achieve it.
These are the things you need to pay closer attention to
Seeing the calculations we just did, you’re probably feeling a bit discouraged, right? And those results were based on the most optimistic scenarios. But when it comes to reality, there are still a few things you need to be mindful of:
Will you have the ability to increase your investment amount in the future?
The first thing to consider is evaluating whether you’ll have the ability to increase your investment amount on QQQ in the future.
As you may have noticed, even if you invest $5000 every month in QQQ, which is already far more than what most people can afford monthly, it still takes 11 years to accumulate $1 million. For amounts below this, it would take at least a decade or more.
At this point, having the capacity to increase your investment amount becomes crucial.
Don’t delude yourself into thinking that investing just a few hundred dollars will lead to a million-dollar accumulation. That’s merely wishful thinking. Increasing the investment amount is necessary to truly achieve this goal.
Do you have the ability to sustain this for over ten years?
Next, whether you can endure this decade-long period in investing QQQ is also something to pay attention to.
No matter how much you invest each month, for most people, it will take at least over 10 years, or even more than 20 years, to achieve goal via QQQ.
Many people see the need to invest for over 10 years and think it’s too difficult! Impossible! And they give up right away. (Well, nowadays everyone is being taught to make quick money, and no one wants to do this slow business.)
However, if you want to solidly reach $1 million, you just have to spend that much time.
There’s a saying in the investment market: “As long as you last long enough, you win.” This applies here too. So, whether you can survive long enough is the key to your success.
Are there any events that might disrupt your plan in between?
In addition to the earlier considerations of increasing investment amounts and whether you can weather significant market fluctuations, you also need to carefully assess whether there might be any events in the future that could require a large amount of money.
Over the course of more than 10 years, you might experience major life changes such as marriage, having children, buying a house, or family members falling ill, all of which may necessitate significant financial support.
When faced with such circumstances, do you have sufficient funds or plans in place to address them? For instance, using emergency savings, reducing investment amounts without touching existing investments, or even more extreme measures like selling off all your holdings and starting over?
Having a plan to proactively address these issues without impacting your investments is also a critical factor in whether you can accumulate 1 million.
If QQQ encounters a major bear market, how will you navigate through it?
Finally, if you encounter a major bear market, will you be able to weather it?
Many people struggle with long-term investment in QQQ primarily due to its high volatility. The short-term ups and downs can be overwhelming if you haven’t undergone long-term training.
We can examine the cumulative decline from QQQ’s peak (sourced from PortfolioLab):
Looking at the past decade, QQQ has often experienced larger declines compared to VOO. In fact, the frequency of declines exceeding 10% is higher for QQQ than for VOO.
If you were to face another prolonged downturn like the one in 2022, could you remain calm and act like everything is fine?
Furthermore, I can assure you that situations involving rapid or gradual declines of over 10% will occur repeatedly throughout your journey to accumulate $1 million. It’s just a matter of when they happen.
Therefore, your ability and psychological resilience to navigate through these cycles of ups and downs are crucial factors that you should carefully consider.
Does it feel distant? You just need to do these things
At this point, you might feel it’s even more challenging, with all the time and considerations involved. Maybe you’re tempted to just give up!
But it’s not as grim as it seems. You just need to do these things, and it’s much simpler than you think:
Please regularly increase the amount you invest
The first thing is to regularly increase your investment amount in QQQ.
If your salary is at an average level and there are no pay raises, you can reduce unnecessary spending and save the extra money for investment.
Moreover, if your company provides year-end bonuses or performance bonuses, it’s advisable to save them all as part of your investment instead of splurging on unnecessary luxuries.
Additionally, consider opportunities for regular salary increases or advancement into management roles. If such opportunities are limited, you may want to explore switching to a company with better pay and benefits to increase your investment capacity.
Alternatively, if you have spare time or energy after work, you can explore part-time jobs or side businesses to supplement your income.
These are relatively simple and feasible ways to increase your investment capacity. Choose the approach that best suits you, but avoid borrowing money for investments.
Focus on investing and don’t be tempted by external distractions
Furthermore, when investing in QQQ, please do so diligently and refrain from randomly buying various stocks.
I understand that many people advocate for focusing on investing in a particular ETF, only to end up purchasing a variety of different stocks afterward.
I’m not saying that this approach is entirely wrong, but it can indeed harm your investment performance.
If you aim for better performance, then focus on investing in QQQ or complement it with a small number of other assets. This way, you won’t deviate from your core strategy and can get closer to your investment goals.
Develop your customized investment plan and then execute it with full focus
Next, please tailor a plan that suits your circumstances and is easy to implement. Then, execute it with full focus.
When devising your plan, consider all the factors mentioned earlier, including your financial balance, potential future expenses, how to handle major market downturns, and even your personal career aspirations. The more detailed, the better, as it will give you a clearer outline.
Once the plan is in place, stick to it diligently. Avoid the temptation to make random investments or deviate from your strategy. Such actions are typically associated with losing money in investments.
Give yourself a little confidence and believe that you can achieve it
Lastly, please give yourself more confidence.
Due to the nature of QQQ, there’s a tendency for significant fluctuations, which could potentially lead to losses.
Moreover, you may encounter unforeseen circumstances that require you to sell off most or all of your holdings, forcing you to start over.
These things can be quite discouraging, right?
But what I want to say is, treat these occurrences as part of your daily routine. After all, investing is never a smooth journey, and there are many obstacles to overcome along the way.
Therefore, when you have confidence in yourself, you’ll have the ability and resources to overcome these challenges one by one, taking significant steps towards your goals.
How do I view this goal myself?
Finally, let me share how I personally view this goal!
For me, accumulating $1 million through QQQ isn’t actually that difficult.
My personal goal is to have assets worth over $5 million when I retire in 30 years. Compared to $1 million, this requires more time and a larger monthly investment amount, making it even more challenging—it’s like facing the final boss level.
To achieve this goal, I’ve adopted a series of strategies.
Firstly, in every job I’ve had since graduating, I’ve had the opportunity for regular salary increases, usually around 5%, and whenever I switch jobs, I negotiate for a salary that’s at least 10% higher than my previous one. Even though I’m content with my current job, I still aim for higher positions or better-paying jobs to ensure my income grows annually.
During bonus seasons, I prioritize investing all of my year-end and performance bonuses in ETFs rather than spending them on unnecessary luxuries.
Furthermore, I try to keep my expenses simple, avoiding spending on luxury items like designer bags or shoes. My social gatherings are usually at affordable restaurants, and I aim to keep my monthly expenses between $1,000 to $2,000.
Through these efforts, I can invest over $2,000 every month.
As for major life events like marriage, having children, or buying a house, I’ve chosen to postpone them for now as I’m currently focused on building financial strength. I believe it’s better to decide on these matters once I’ve built enough financial stability. After all, getting married at 40 or buying a smaller house isn’t uncommon, right?
Now, what about facing a stock market crash?
Well, I can only say that when you’ve been in the market long enough, you realize that these fluctuations are just part of the game. I focus on the long-term future development, so I don’t worry about these minor fluctuations.
Of course, during tough times, it might seem overwhelming, but I quickly get over it. I don’t want such incidents to disrupt my life.
Lastly, learning to be grateful and giving out kindness often leads to receiving more kindness in return, making my journey relatively smooth.
I understand that many people’s living conditions aren’t ideal, and seeing what I’ve just mentioned might seem like I’m showing off.
Honestly, I was just like everyone else at the beginning, with a modest salary and sometimes working late into the night. I had a pile of bills to pay every month, and my investments were losing money, making life feel like hell.
But I realized that this couldn’t continue. So, after setting my goals, I continuously worked on improving myself and diligently executed the strategies I mentioned earlier. Gradually, my monthly investment amount increased from $300 or $500 to over $2,000, and I’m even aiming to reach $5,000 in the future.
So, you’re not alone, and please don’t give up easily. Find your goal and take it step by step; you’ll get there eventually.