Want to Build a $2 Million Portfolio by Retirement? Here's How Much You Should Aim to Invest.

Growing your portfolio to $1 million for retirement may not be enough to live comfortably. Not when you factor in inflation and how much more expensive it may be to live in the future. Aiming for a higher nest egg can put you on a much better path forward.

Getting to $1 million isn't easy, and targeting $2 million may seem completely insurmountable for the average investor. But even if you only have 22 years until retirement, you may not need more than a five-figure investment right now. Below, I'll show you just how much you would need at different ages to grow your portfolio to $2 million.

A fast-growing fund can lessen the amount you need to save

If you are only looking to mirror the S&P 500 and its historical 9.7% annual gains, then unless you start investing very early, it could be extremely difficult to get to $2 million. That's because while the S&P 500 is a safe invest, it may not generate the strong gains you need to significantly grow your portfolio's balance over time.

Consider that if your portfolio were to grow by 9.7% per year for 20 years, it would expand to approximately 6.4 times its original value. Working backwards, that tell us that to get to $2 million, you would need to invest more than $312,000 today. If you have 30 years, that figure falls to $125,000.

If you're comfortable investing in tech stocks and having exposure to some volatility, then one way you could generate better returns is by investing in the Invesco QQQ Fund (QQQ -2.32%). The exchange-traded fund (ETF) tracks the top 100 non-financial stocks on the Nasdaq. This is the cream of the crop when it comes to growth stocks and big tech companies. You'll get exposure to stocks such as Tesla, Nvidia, Costco, and a wide range of growth investments.

The fund isn't as diversified or safe as the S&P 500 but it can make up for that by potentially offering much greater returns. In 10 years, the Invesco fund has generated total returns (which include dividends) of more than 420%, versus 230% for the S&P 500. That averages out to a compounded annual growth rate of around 18% for the narrower ETF.

This doesn't mean you'll get a near-18% return every year or even most years, but by having exposure to the top growth stocks in the world, you can be in an excellent position to outperform the market.

How much would you need to invest today to get to $2 million by retirement?

Let's assume that you invest in the QQQ Fund and that, on average, it generates an annual return of around 15%. That's not as high as its 10-year average but still far better than the S&P 500's growth rate. Based on that assumption, here's how much of an investment you would need, depending on how many investing years you have left, assuming you retire at 65:

Calculations by author.

It's not until you have fewer than 22 investing years left that you would need to have a six-figure balance for it to grow to $2 million by the time you retire, assuming a 15% annual growth rate.

Invest in the QQQ Fund even if you fall short of these numbers

These numbers can seem incredibly high depending on your age and financial situation. But even if you can't invest that much money today, it's never a bad idea to invest in a high-powered ETF like the Invesco QQQ Fund. The above example assumes you just put a lump sum in today and forget about it. But in reality, you can add to your position over time, which is why it's important not to get discouraged. Your financial position may change, potentially allowing you to invest more than what you expected.

By targeting the best growth stocks on the market, you can help ensure that you make the most of any investment, while keeping your risk relatively low.