With the ETF-1-2-3 to the first million!

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Do you aim to hit your first million with ETFs? If so, then you are certainly not alone. A little hint in advance: It is a rather long-term goal that definitely requires willpower and a high level of commitment. However, if you have the prerequisites and psychological strength, you can achieve this goal in the long term.

How do you ask yourself? Well, as an investor you can only answer that for yourself. After all, there are basically many roads that lead to Rome. Or the first million. However, my ETF-1-2-3 could be a first clue as to how you can do this. And possibly also sharpen your eye for essential details.

1. ETFs

First of all, let’s start with the number one: At the same time, we deal with some basic requirements that are needed. In the end, however, a lot can be kept very reduced. The bottom line is that an ETF is enough to crack the magic one with the six zeros.

Remember, Foolisher ETF investor: with your first passive fund you are directly diversified. Sometimes, with too much choice, the results are even worse. Of course, this must be avoided.

The question remains, of course, which passive fund or index should be used. In principle, the MSCI World could be a broadly diversified option. If you ask me, you should also have thought about the S&P 500 at least once.

Although it contains fewer stocks, the US index historically achieved a higher return of around 9% pa, while the MSCI World only managed 7%. In addition, even Warren Buffett recently ennobled the US economy in the context of ETFs. That could be a hint that this could possibly be an exciting index for the first million.

2. Ways

What you should still be aware of is that there are two ways you can achieve this goal: namely, through a higher one-time investment. This can be useful if you have a lot of money on the high edge that you want to invest anyway.

Or investing via savings plans. This form has the advantage that you can benefit from the average cost effect as an investor. So you don’t need to worry about the ideal time. Something that might keep you from investing a five-figure sum directly. Maybe even more.

It is important to consider: It makes sense to invest as much as possible as early as possible so that the compound interest effect can be felt. A mixed form could also be an option: For example, by investing a sum X at the beginning and consistently expanding it with the help of savings plans.

3rd decades

A realistic period of time to reach the goal of one million euros can be three decades: after all, a one with six zeros is anything but easy to achieve. If you want to save this amount over 30 years, for example, you would have to set aside 2,777 euros per month. Fortunately, we have the compound interest effect.

If we assume a savings plan variant and you receive an average annual return of 9% per year as an investor (for example, historically just with the S&P 500), you would need EUR 582.94 per month for a period of three decades. As I said: a high stake, but the goal is not small either.

If, on the other hand, you want to achieve the goal using a one-time investment under these premises, you need an initial amount of approx. And, as I said, mixed forms are also conceivable. Overall, however, these are figures that can show: Yes, the first million with ETFs is possible.

Is my ETF-1-2-3 yours too?

As you can see, the goal of a million euros is possible using ETFs. My ETF-1-2-3 may have shown you some options to think about as a Foolisher passive investor. Is that your way? You should answer that for yourself.

The post With the ETF-1-2-3 to the first million! appeared first on The Motley Fool Germany.

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