Is it possible to rely on VOO solely to roll out $1 million?

Many people consider reaching tens of thousands of dollars as their first significant life goal. Therefore, whether it’s through simple savings, investing in individual stocks or ETFs like VOO and QQQ, achieving this goal within a few years is possible.

But what about reaching “1 million in savings”? I doubt many people, including yourself, seriously consider whether it’s achievable.

Unless you come from a wealthy background or have an annual salary of at least six figures, for most people, a million dollars is an astronomical figure.

If you’re already investing in VOO, you may also wonder if it’s possible to accumulate a million dollars solely through it.

So, based on my own experience so far, I’ll guide you step by step to understand whether “reaching a million through VOO” is a fantasy, and if it’s actually achievable, what are the things and factors you need to thoroughly understand. Finally, I’ll share some insights based on my experience pursuing this goal.

Let’s get started!

How should we capture the return of VOO?

First, we need to know what the annualized return rate of VOO is.

As of 2024/3/31, according to the official data from VOO, the annualized return rates for various periods are as follows:

YTD1-Yr3-Yr5-Yr10-YrSince inception in 2010

Next, we need to decide which return rate to use.

Here, we will use the return rate of 14.44% since inception to calculate. The reason is that the longer the period, the more stable the trend, and the numbers are relatively more accurate.

How much do I need to invest each month?

In addition to VOO’s rate of return, how much money we invest each month is also crucial in determining whether we can accumulate $1 million.

The following table shows the accumulated assets after several years for different monthly investment amounts, based on the previously mentioned rate of return (the years on the left indicate in which year the $1 million mark is reached for different monthly investment amounts):


For calculation convenience, the algorithm used here is to accumulate the funds until the beginning of the next year before making the investment, such as the money saved in the first year being entirely invested at the beginning of the second year, and so on.

Therefore, you can clearly see that if you invest $500 each month in VOO, it will take you 24 years to accumulate 1 million. If you invest $1000 each month, it will also take 20 years to achieve. Increasing the monthly investment to $2000 can shorten the time to 15 years to reach the goal.

The higher the amount, the faster the time spent.

Rather than just accumulating tens of thousands, you should carefully consider these factors

Based on the table just now, I believe you already have a concept in mind.

However, rather than just accumulating tens of thousands, there are more things you need to consider, and your attitude should be more cautious.

Here are four factors you must consider carefully:

Will your investment amount increase?

The first thing you need to carefully consider is whether your future investment amount will increase in VOO.

As you saw in the calculation table, the larger the amount, the easier it is for you to accumulate to 1 million. Therefore, “increasing the investment amount” is a very crucial factor.

Many people, when investing regularly, only use a single amount as a benchmark, thinking that continuing with a fixed amount like $300 or $500 in VOO will eventually achieve their goal.

This approach isn’t necessarily wrong, but it often leads to a situation where you see the finish line but continue to slow down, or even exceed the time frame without reaching the goal, leaving you breathless.

If you want to reach your goal smoothly and gracefully, you must increase your investment amount at the right time.

Can you sustain it for at least 10 years?

Furthermore, whether you have the ability and determination to sustain this for more than 10 years is also something you need to carefully consider.

Referring back to the table, even if you invest $5000 per month in VOO, it will take at least 10 years to accumulate to $1 million. Not to mention, if the amount is lower, the timeframe would start at least from 15 years.

And that’s under the most optimistic circumstances. In reality, it might take even longer.

So, just like preparing for a long-distance marathon, you must prepare for a long-term battle and make a firm commitment to reach this extremely distant goal.

What if you have expenditure in between?

Next, you also need to consider how to arrange your finances for significant expenses you might encounter in the future.

During this period of over 10 years, you might get married, have children, buy a house and a car, all of which require substantial financial commitments. Alternatively, your parents might fall seriously ill, requiring long-term treatment and care, leading to significant expenses.

Faced with such major expenditures, will you have any additional financial planning strategies? For instance, selling all your stocks to cover the costs and starting over entirely, or adjusting your existing investments slightly to pay in installments while interrupting your future periodic investment plan. These are all aspects you need to think carefully about.

How will you navigate through a major bear market during the interim?

The last and perhaps the most crucial aspect you need to carefully consider is how you will handle encountering a major bear market in VOO.

You can’t be overly optimistic and assume that over the span of more than 10 years, there won’t be any significant downturns on VOO or other stocks. It’s entirely normal for the stock market to experience both bear and bull markets cyclically as long as it exists.

Many people tend to plan with the assumption that the market will always rise (and it’s true when looking back to the history, or VOO’s trend), but they often overlook the possibility of downturns and fail to prepare for them.

Based on the durations of recent bear markets, they typically last only a few years before transitioning into a new bull market cycle, as indicated by the red-boxed sections in the following graph:

VOO related S&P 500 plunge

That being said, facing a significant downturn can be emotionally challenging for many people, let alone enduring it for several years.

Therefore, when confronted with a major downturn, you must carefully consider whether you will succumb to pessimism like many others or choose to remain optimistic, treating it as a routine part of life and focusing on living well.

To achieve the actual goal, you must accomplish these tasks

Accumulating 1 million via VOO only seems so difficult, and there are so many things to consider, it might be easier just to give up. But it’s not as hard as you think. As long as you get these few things right, success is still within reach:

Please increase the amount you invest every year

The first thing is to consistently increase the amount you invest in VOO, and it’s non-negotiable.

In line with the previous point, if you want to reach the finish line steadily and gracefully, you need to increase your investment amount.

You can do this by investing all of your annual salary increases, or by putting all of your year-end bonuses or performance rewards into investments instead of spending them.

Alternatively, if you suddenly realize you’ve been overspending, perhaps on things like spa treatments or impulse purchases online, you can cut back on expenses, control your desires, simplify your lifestyle, and free up more funds to invest.

These are all easily achievable ways for you to increase your investment contributions.

If you want to go further, you could consider aiming for higher-paying positions within your company, or even switching to industries with better salaries. You could also take on a second job after hours, or even start your own side business, such as running a social media account or doing freelance buying and selling, to increase your income and consequently your investment capacity.

(And just a reminder, borrowing money doesn’t count here – please be mindful of that!)

Focus on investing in VOO

The second thing is to focus on investing in VOO.

Many people tend to scatter their investments across various options, buying a little here and there, resulting in holding at least over 5 similar assets, especially evident in ETFs.

If you don’t believe it, you can check your investment app or ask your friends about their holdings.

I won’t say this approach is wrong, but when your investment portfolio is too diversified, your returns will also be diluted.

VOO itself is already diversified, so what’s the point of buying more ETFs?

If you want to invest in VOO, then focus solely on investing in VOO or complement it with a small number of other assets. This way, you won’t deviate from your main focus and can potentially yield greater investment returns.

Develop your personalized investment plan and then execute it with focus

The third thing is to establish your personal plan and then stick to it diligently.

When drafting 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, all you need to do is execute it consistently. Avoid the temptation to make random investments or deviate from your strategy, as that’s what people who consistently lose money tend to do.

Give yourself some confidence and believe that you can achieve it

The final thing is to give yourself more confidence.

You may encounter stock market crashes or situations that force you to interrupt your investments, repeatedly shaking your confidence.

These occurrences can indeed be disheartening, but if you treat them as part of the normal course and reassure yourself that everything will pass, you can navigate through the challenges smoothly.

With confidence, you can successfully navigate this long journey of 10 or even more than 20 years!

How do I personally view this goal?

Finally, let me share how I personally view this goal!

I personally don’t find accumulating $1 million through VOO to be difficult; it’s just a matter of time. As mentioned earlier, the key factors to consider are whether you can continuously increase your investment amount, continuously improve yourself, and establish a solid plan and mental resilience, all of which I find to be quite basic and easily achievable.

My personal goal is to have assets of over $5 million upon retirement in 30 years. Therefore, reaching $1 million, according to my plan, is actually quite achievable; it’s just a small rest stop along my journey.

Firstly, I continuously invest in myself, gain recognition from my company through my abilities, secure annual raises, and receive more annual bonuses. Additionally, to achieve my goal, I also strive to save money, allowing me to invest over $2000 per month. According to the calculation table, I can reach my goal in less than 15 years.

Regarding major life events like marriage and buying a house, I choose to postpone them until I’ve accumulated sufficient financial resources. It’s not too late to decide when the time comes (there are more and more people getting married at 40 nowadays, so getting married early isn’t really a big deal).

As for encountering a major stock market crash, some people may ask “aren’t you afraid?”.

Well, I can only say that when you’ve been in the market long enough, you’ll realize that it’s just a routine occurrence, nothing to worry or fear about. I focus on the long-term future development; why bother about these minor fluctuations?

Of course, it may feel chaotic when it happens, but I quickly brush it off. I don’t want my life to be disrupted by such things.

Furthermore, learning to be grateful is crucial. Giving more kindness will lead to more kindness in return, making my journey relatively smooth.

I know many people don’t have ideal living conditions and might see what I just mentioned as 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 this wasn’t sustainable. So, after setting my goals, I continuously improved myself and fully implemented the few things mentioned earlier. Slowly but surely, my monthly investment increased from $300 or $500 to over $2000 now, and I’m even aiming to reach $5000 in the future.

So, you’re not alone, and please don’t give up easily. Find your goal, take it slow, and you can achieve it.

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