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This ETF can help increase your retirement account



If you’re like most people, your retirement accounts are much smaller than they should be, and you’re probably not even sure how to better invest the money you have in them. Let’s address those issues.

Here’s a look at how much you can accumulate – if you invest very effectively over long periods of time.

A yellow road sign indicates retirement ahead.

Image source: Getty Images.

Increase your pension accounts

First of all, you know that no matter how much you have accumulated so far, if you still have a little time before you retire, you can certainly increase your accounts significantly. You just have to invest those dollars effectively, and it’s hard to beat the stock market for that.

Look at the chart below, providing data from Wharton Business School professor Jeremy Siegel, who studied investment returns from the 1800s to recent years. He found that stocks exceed bonds in 96% of all 20-year holding periods between 1871 and 2012, and in 99% of all 30-year holding periods. From his data, here are the average returns on stocks, bonds, bills, gold and the dollar, between 1802 and 2012:

Asset class

Nominal annual return

stocks

8.1%

bonds

5.1%

bills

4.2%

gold

2.1%

US Dollars

1.4%

source: Long-term stocks.

If you are more interested in a more significant investment period for yourself than 210 years, know that the annual growth rate for stocks from 1926 to 2012 was 9.6%, and this could also easily beat the alternatives. This is encouraging, but the period in which you are investing may not bring such results – you may have an annual average of 5% of average profit, an 8% one, or more or less. Let’s just go with 8% now. The table below shows how much you can accumulate regularly by saving different amounts for different periods:

Increases by 8% for

$ 5,000 invested each year

$ 10,000 invested each year

$ 15,000 invested each year

5 years

$ 31,680

$ 63,359

$ 95,039

10 years

$ 78,227

$ 156,455

$ 234,682

15 years

$ 146,621

$ 293,243

$ 439,864

20 years

$ 247,115

$ 494,229

$ 741,344

25 years

$ 394,772

$ 789,544

$ 1,184,316

30 years

$ 611,729

$ 1,223,459

$ 1,835,188

35 years

$ 930,511

$ 1,861,021

$ 2,791,532

40 years

$ 1,398,905

$ 2,797,810

$ 4,196,716

Source: Calculations by the author.

The best ETF to increase your wealth

So, given that stocks generally exceed, how should you better invest your hard-earned dollars? Well, index funds make the most sense to most people. An index fund is a passively managed fund – one that holds simply the same securities that are in a particular index. His returns then approximate the returns of the index itself – provided its rates are low. (Many funds for the ultra-low annual sports fee index – often below 0.10%.)

A particularly simple way to invest in various index funds is through exchange traded funds (ETFs). They are a hybrid of mutual funds and stocks, holding a variety of securities but trading as stocks – and letting you buy as few or as many shares as you want through your brokerage.

A leading candidate and one of the best known ETFs is SPDR S&P 500 ETF (NYSEMKT: SPY), which tracks the S&P 500, an index of America ‘s 500 largest companies often used as representatives for the entire U.S. stock market. Its properties, together, account for about 80% of the total US market value.

You can go beyond that, however, and opt for it Paraguay Total ETF Stock Market (NYSEMKT: VTI), which aims to track the performance of the entire US stock market – including smaller companies that did not qualify for the S&P 500. An even broader opportunity is Paraguay Total world stock ETF (NYSEMKT: VT), which includes world stock markets

Any of these, or a combination of these, should serve you well, effectively boosting your long-term dollars.




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