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For almost everyone, playing for a professional sports team, writing a bestselling book, or winning an Oscar is just a pipe dream – it is unlikely to happen. But there are still some wonderful life achievements that are within reach – like a millionaire’s retirement.
With enough time and effective savings, most of us can become millionaires, and we can do that simply by investing in the entire stock market – perhaps through a low-cost S&P 500 index fund. However, your portfolio can grow very quickly if you include companies that are growing rapidly (and continue to do so).
Image source: Getty Images.
Grow a million dollars
Before I name any promising companies, here’s a rundown of what it takes to raise a million dollars. It all depends on three factors:
Your investment calendar
Obviously, the more your investments can grow, the bigger your nest egg will become. That’s why it’s best to start early – even in your twenties – as it might even allow you to retire early.
The growth rate of your investments
If you save and invest aggressively for decades, but your money only grows by 1% or 2%, you may not reach millionaire status. The stock market, over several decades, has averaged an annual gain of almost 10%. This is a good goal to achieve, even if the market can on average less (or more) your investment period.
How much you invest
Finally, how much you invest is also very important. The table below shows how much you could earn by regularly saving different amounts over different time periods:
|
Growth at 8% for |
$ 10,000 invested annually |
$ 15,000 invested annually |
$ 20,000 invested annually |
|---|---|---|---|
|
5 years |
$ 63,359 |
$ 95,039 |
$ 126,718 |
|
10 years |
$ 156,455 |
$ 234,683 |
$ 312,910 |
|
15 years |
$ 293,243 |
$ 439,865 |
$ 586,486 |
|
20 years |
$ 494,229 |
$ 741,344 |
$ 988,458 |
|
25 years |
$ 789,544 |
$ 1,184,316 |
$ 1,579,088 |
|
30 years |
$ 1,223,459 |
$ 1,835,189 |
$ 2,446,918 |
Data source: author’s calculations.
This chart assumes an average annual growth rate of 8%, which you can expect to achieve with a long-term index fund investment. Below are three companies to consider investing in to help you become a retirement millionaire. Each has grown faster than the overall market and looks set to continue to do so.
1. Amazon.com
E-commerce juggernaut Amazon.com (NASDAQ: AMZN) has clearly grown at a rapid rate for a long time. Its 20-year average annual growth rate in its stock price was recently 26.3% – enough to turn a single $ 10,000 investment into $ 1 million. It can be difficult for businesses to grow as quickly as they once did, once they’ve grown – but over the past decade, Amazon’s average annual growth rate has been even higher – 33. 8%. (For comparison, the S&P 500 has averaged 6.9% and 13.9%, respectively (with dividends reinvested) over the past 20 and 10 years.) No one should expect annual gains. averages 25% or more over the next decade, but Amazon offers plenty of reasons to expect above-market growth for the foreseeable future.
For example, it is pulling all cylinders during the pandemic, with third-quarter net sales up 37% from last year’s levels of $ 96 billion, while net income tripled. The company has added many more workers and plans to add 100,000 more permanent workers, who will receive at least the company’s minimum wage of $ 15 an hour. While many, if not most, associate it solely with its online marketplace offerings, one of its biggest cash cows these days is its cloud computing platform, Amazon Web Services (AWS). , which rose 29% to $ 11.6 billion in the third quarter. , and claims a 33% market share in its industry.
Image source: Getty Images.
2. PayPal
Pay Pal (NASDAQ: PYPL) is another outstanding artist, with an average annual growth rate of 37.1% since he was eBay in the summer of 2015. You’re probably assuming this is a reasonably large financial services company, as many of the purchases you make online have a PayPal option. But you probably don’t know How? ‘Or’ What it’s a big business. For starters, its market value recently stood at $ 241 billion – exceeding the recent market value of Coca Cola, Netflix, and AT&T and is more than double that of Wells fargo or Citigroup.
PayPal serves some 361 million active users around the world (roughly the population of the United States), and in the third quarter, processed about four billion transactions worth about $ 247 billion. On an annual basis, this would represent around 12 billion transactions worth nearly a thousand billion dollars. That’s pretty impressive, but also note that PayPal also owns Venmo, the rapidly growing mobile payment system.
N ° 3: Activision Blizzard
Activision Blizzard (NASDAQ: ATVI) is a major player in the video game industry, with an average annual growth rate of 25.2% over the past 20 years and 21.8% over the past 10 years – dividends reinvested. Part of its long term success is probably due to the fact that its products are kind of addictive – that’s not a bad business model to have! (In fact, a recent study found that only 10% of gamers can actually become addicted to gambling, with negative consequences in their lives.)
If you are familiar with video games, you will see familiar names among the titles of Activision Blizzard, many of which have become blockbusters. Company titles include the Call of Duty, World of Warcraft, Hearthstone, Overwatch, Warcraft, StarCraft, Diablo, and Candy Crush franchises. In its most recent quarter, the company reported some 390 million monthly active users, with net revenue up 52% year-over-year. The future of Activision Blizzard looks quite bright, with the video game market expected to grow nearly 13% per year between 2020 and 2027, according to Grandview Research.
These three companies are all doing well and are well positioned to continue to do well for a long time to come. They are worth adding to your investment watch list and may even be worth buying now, if you see them as undervalued and plan to hang in there for the long haul.
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