If I invest $500 in VOO and QQQ per month, how long will it take to reach $100,000 ?

Some people consider “reaching the first $100,000” as an important milestone in life. Even though this amount may become less valuable in the future, achieving this milestone can be seen as a significant accomplishment. Apart from just saving money, you can achieve this through investments in VOO and QQQ.

You can either invest solely in VOO or QQQ to reach your goal, or you can invest in both simultaneously, which can expedite the process. This is the main focus of this article.

Therefore, based on my practical experience, I will share with you how to achieve the goal of reaching $100,000 in just a few years. Additionally, I will highlight the risks and precautions you need to be aware of along the way. Finally, I will discuss my own practical approach to give you a more concrete idea.

How do you capture the return rates of VOO and QQQ?

The first thing we need to do is determine our investment return rate, as this will affect our subsequent estimates.

As of March 31, 2024, based on the statistics provided on the official websites of VOO and QQQ, the annualized return rates of the two ETFs, considering solely the ETF market price, are as follows:

Year-to-date1-Yr3-Yr5-Yr10-YrSince inception
VOO10.45%29.83%11.42%15.00%12.91%14.44%
QQQ8.66%39.32%12.40%20.65%18.60%9.71%

Generally speaking, data from longer periods tends to be more indicative. However, due to the differing issuance periods of the two ETFs, we choose the returns from the past decade as a suitable benchmark. Therefore, based on the same criterion, the returns over the past ten years, namely 12.91% and 18.6%, are more appropriate.

The volatility of the two ETFs

Next, we also need to compare the volatility of the two ETFs, which will affect how we allocate funds.

According to PerformanceLab’s statistics, over the past decade, the volatility of QQQ has mostly been higher than that of VOO, as shown in the following chart:

VOO QQQ voltility

Therefore, while QQQ can offer higher returns, what comes with it is the need to endure higher volatility.

How should the allocation of funds between the two be determined?

Next, we need to decide how to allocate the funds, which depends on the comparison of volatility just discussed.

If you’re aiming for higher returns and feel you can tolerate greater volatility, you might consider allocating 80% to QQQ and the remaining 20% to VOO.

However, if you’re more risk-averse and prefer to pursue a relatively stable but slightly higher return, you could do the opposite by allocating 80% to VOO and the remaining 20% to QQQ.

If you’re still unsure about how to allocate your funds, a 50/50 split might be a good starting point. As you gain more experience and understand your investment preferences better, you can adjust the allocation accordingly.

What’s the result under different weights?

So, under different investment ratios, how much will be accumulated annually?

Before we calculate, we need to determine the respective rates of return for each ratio.

Calculating based on the latest ten-year annualized return rates, the returns under different ratios are as follows:

VOO/QQQ Weights90/1080/2050/5020/8010/90
Total return13.48%14.05%15.76%17.46%18.03%

When we receive returns, the asset changes under different ratios will look like this:

YearsAccumulated costs90/1080/2050/5020/8010/90
100
26,0006,8096,8436,9457,0486,809
312,00014,53514,64714,98515,32615,118
418,00023,30323,54824,29125,05024,926
524,00033,25333,69835,06336,47236,502
630,00044,54445,27547,53349,88950,166
736,00057,35758,47861,96765,64866,293
842,00071,89773,53678,67584,15985,329
948,00088,39690,71098,016105,902107,796
1054,000107,120110,295120,403131,443134,315

Overall, whether you lean more towards VOO or QQQ, you can achieve your goal within 9 to 10 years.

Therefore, how to allocate the ratio depends on your own assessment.

Of course, the above calculations are for reference only and do not necessarily reflect the actual outcome. It could be faster or slower depending on different circumstances each year.

After making the decision, you still need to do the following things

Although according to the calculations just now, it is theoretically possible to accumulate 1 million in the seventh year, however, to truly achieve this goal, there are several things you still need to do:

Focus on investing in VOO and QQQ

The first thing to do is to focus on investing in VOO and QQQ.

Many people, after investing in VOO and QQQ, may find other ETFs or stocks appealing. They may start buying a little of everything, expanding their investment portfolio. However, doing so can have great possibilities to lower your overall return and prevent you from achieving your goals within the planned timeframe.

Therefore, it’s important to stay focused on this task. Settle your mind and avoid being swayed by others’ suggestions. Otherwise, it could lead to significant losses!

Reinvest dividends

The second thing is to reinvest your dividends into VOO and QQQ.

Although the dividends from VOO and QQQ are minimal, around 1.5% and 0.8% respectively, even lower than fixed deposits, reinvesting these small dividends back into them will also lead to appreciation in value due to the rise in stock prices.

With reinvestment, your number of shares will increase, allowing you to receive more dividends next time, which you can then reinvest again to receive even more dividends… continuing this cycle indefinitely. Coupled with the continuous increase in stock prices, this will accelerate the timeline for reaching your goal.

Extend the investment period to give yourself a little more flexibility

The third thing is to extend your investment period, giving yourself some flexibility.

The calculations we just made were all based on the assumption that the investment return remains constant during this period, without any major negative factors causing a significant decline.

Think about it, do you really think it’s possible to achieve such perfect conditions in real life? It’s unlikely, right?

So, faced with various uncertainties, the best approach is not to fixate on achieving your goal within a few years. You can extend the timeline to 10 or 20 years to give yourself more flexibility, making it easier and smoother to execute.

Increase your investment amount consistently

The fourth thing is, if possible, to increase the amount you can invest as needed.

While being able to invest $500 per month is already great, according to the calculations we just made, you might find ten years too long. So, if you want to speed up the process, increasing your investment amount is the best way.

You can achieve this by cutting back on expenses, reducing waste, or putting all your salary increases and bonuses into investments. This is a simple approach that most people can adopt.

Of course, taking on part-time jobs or seeking higher-paying positions to increase your income and thereby the amount you can invest is also a great option.

Every now and then, give yourself some encouragement and motivation

The final thing is to give yourself more confidence.

I know many people, in the early stages of investing or even into the middle, constantly doubt, “Can I really achieve this goal?” and sometimes, when faced with sudden corrections, even around 5% to 10%, they may hesitate to continue investing due to being startled.

It’s quite normal. Even after investing for so long, I still have these thoughts.

So, please remind yourself from time to time that you’re already on the path to your ideal future, and someday you will definitely achieve it. There’s no need to give up now.

If it were me, I would do this…

Finally, let me share how I would approach it, so you have a model to refer to.

Firstly, regarding the allocation, I would distribute 80% to VOO and 20% to QQQ.

Next, I would employ a dollar-cost averaging strategy, allowing the app to automatically purchase for me. This way, I only need to ensure that there’s enough balance in my account, without worrying about timing the market or whether to buy.

Then, I would unfollow all financial-related channels, media, and social media accounts to reduce the chances of being influenced (and to have more space for myself).

When dividends are distributed, I would let them automatically roll into the scheduled deduction plan, without the need for manual purchase.

In terms of investment schedule, since I’m investing for at least 10 years anyway, I don’t need to stick too tightly to my goals and can give myself some flexibility.

Whenever there’s a raise or bonus, I would invest the full amount, increasing the dollar-cost averaging amount accordingly and deducting according to the schedule.

Lastly, I would focus on my work, continuously improve myself, and actively seek opportunities to increase my income. This way, I can increase the amount I can invest and live my life well without being bound by this matter, avoiding any disturbance in my life.

If executed properly, you can easily achieve the goal of reaching $100,000!

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