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3 Ways to Grow $100,000 Into $1 Million for Retirement Savings

By Christy Bieber - Apr 1, 2021 at 9:02AM

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$100,000 can easily make you a millionaire, given enough time.

Most people who become millionaires in retirement do so slowly over time. Saving $100,000 is a great first step. But the big question is, how you can go from $100,000 to $1 million by the time you hit retirement?

The approach that you'll want to take is going to depend on your risk tolerance, your knowledge of -- and interest in -- different types of investments, and your timeline for retiring.

Here are three different approaches to consider. 

Investor looking at computer and charts.

Image source: Getty Images.

1. Invest in an S&P ETF 

The most reliable path to becoming a retirement millionaire is to put your money into an S&P 500 fund.

The S&P 500 is made up of 500 of the largest U.S. stocks. When people talk about "the market," they're often referring to the S&P 500. It has an average annual return of 10.9% and it's a very reliable investment. In fact, if you invest in it for long enough, you're all but certain to turn a profit. 

It's easy to invest in the S&P 500 by buying an exchange traded fund that tracks this index. But turning $100,000 into $1 million is going to take time if you put your money into an S&P fund. That's because, while you can likely expect to earn around a 10.9% average annual return, you're not likely to beat that. If you don't add to your $100,000, it'll take you a little over 21 years to hit your $1 million target.

Of course, if you have $100,000 saved by around age 40, odds are good you'll hit your goal by retirement. And if you add to your $100,000 to help it grow, you can amass a seven-figure nest egg even faster. 

2. Invest in shares of individual stocks

Investing your $100,000 in shares of individual stocks could potentially get you to your $1 million target much faster than investing in an S&P fund. But there's also a greater risk of loss. When you put your money into individual companies, the return you earn on your investment will be dependent on how those particular businesses are valued by investors over time. 

While some or even all of the companies you choose to invest in could outperform the S&P 500 and earn you returns far exceeding 10.9%, it's also very possible some or all of the companies will underperform. In fact, if you pick stocks poorly, you could lose most or all of your money. 

If you want to turn your $100,000 into $1 million by investing in individual stocks, it's critical you do the research necessary to build a diversified investment portfolio full of solid companies. This means developing a sound investment strategy, determining how to allocate your investment dollars, and putting your money into buying shares of companies you believe will stand the test of time. 

3. Choose alternative investments

Beyond stocks and ETFs, there's a whole world of other investments out there, including cryptocurrencies and real estate. Investing $100,000 in them could also potentially help you become a millionaire retiree, perhaps more quickly than if you invest in an S&P fund. However, depending which investments you chose, the risk of loss may be even greater than the risk that comes from buying individual stock shares. 

Ultimately, the best thing to do is to carefully research the different assets that you can invest in and make sure you understand both the potential returns and the possible risks you're taking on. For most people, a mix of different investments turns out to be the best approach to turning $100,000 into $1 million by retirement age. 

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