Investing early and often can be an effective way to set yourself up for a great retirement.
Living off dividend income can be a great goal to strive for in retirement. Expenses are often lower during your retirement years, and generating $50,000 in annual dividends can help you live comfortably.
And while that is not a small amount of dividend income, generating that much in the future may not be as daunting of a challenge as it appears to be. Here's a look at how investing $50 per week can help fund your retirement years.
Investing in growth is the best option to build up your portfolio
Dividend stocks can be safe options for investors on a fixed income who need stability. But if you're looking at an investing period the spans decades, then growth stocks can be a much better option for you. That's because while there might be volatility and bad years along the way, that should balance out over the long term.
A great example is the performance of the Invesco QQQ Trust (QQQ -0.19%), which gives investors exposure to the top 100 nonfinancial stocks on the Nasdaq Stock Market. The tech-heavy fund includes big names such as Apple, Microsoft, and Amazon. Over the past 10 years, its total returns (including dividends) have totaled 407%. That averages out to a compounded annual growth rate of 17.6% -- well above the long-run average of the S&P 500, which is close to 10%.
The fund is a good place to invest, especially if you're unsure of which stock(s) to put your money into. It can simplify your investing strategy, making it easier to set aside money every week into the fund.
Getting your portfolio to $1 million is the key
Before you can rely on dividend income, you first need a fairly large portfolio balance. And you can build it up over the years by investing just $50 per week (assuming minimal or no commission costs).
This chart shows you how, over a period of 30 years, investing $50 every week could grow your portfolio to more than $1 million.
Chart by author.
Assuming a 15% annual growth rate (on average), a $50 per-week investment could grow to a value of more than $1.5 million after 30 years. And it would take a little more than 27 years for it to hit the $1 million mark.
Averaging such a high growth rate may be challenging, but even if it's not quite that high, you could still end up close to or over $1 million. And with a growth-focused fund such as the Invesco QQQ Trust, you can maximize your odds of achieving those kinds of returns without having to take on much risk in the process.
The next step is to invest in dividend stocks
If you get your portfolio to $1 million or more, you've accomplished the hard part. Once you've got a balance that high, you can put it to work by investing it into high-yielding dividend stocks. During your retirement years, you'll likely want to move away from growth stocks anyway, and into less volatile investments. And the higher that balance gets, the less of a dividend yield you'll need to generate some significant income.
If, for example, your portfolio gets to a value of $1.5 million, you could invest in a fund or multiple investments that yield an average of 3.3%. At that rate, you could generate $50,000 in annual dividends. With a lower portfolio balance of $1 million, you would need to target an average yield of 5%.
Invest early and often for the best results
Amid inflation and rising interest rates, it's not an easy time to find money to invest in stocks. But if you can find a way to cut $50 per week out of your budget to invest into a diversified fund such as the Invesco QQQ Trust, it can pay off in droves for you later in life.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, and Microsoft. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
FAQs
$50 weekly is how much per year? If you make $50 per week, your Yearly salary would be $2,600.
How can I invest $50,000 for a quick return? ›
How to invest $50K: 10 proven strategies
- Max out your retirement accounts. ...
- Contribute to a health savings account (HSA) ...
- Fund a 529 college savings account. ...
- Stash it in a high-yield savings account or CD. ...
- Invest in Treasurys. ...
- Invest in an index fund. ...
- Invest with a robo-advisor. ...
- Invest with a brokerage account.
In a market that generates a 2% annual yield, you would need to invest $600,000 up front in order to reliably generate $12,000 per year (or $1,000 per month) in dividend payments. How Can You Make $1,000 Per Month In Dividends? Here are the steps you can take to build yourself a sufficient dividend portfolio.
How to turn 50K into 100K? ›
How To Turn 50K Into 100K – 10 Realistic Methods To Try!
- Start An Online Business.
- Invest In Real Estate.
- Invest In Stocks & ETFs.
- Invest In A Blog.
- Retail Arbitrage.
- Invest In Alternative Assets.
- Create A Rental Business.
- Invest In Small Businesses.
By doing this, you can create a large amount of income every year. By putting $50 aside each week, that will add up to $2,400 per year! Over time, sure, that could create, say, $48,000 over 20 years. However, invest it, and you can create an even larger portfolio.
How much is $1,400 dollars a week for a year? ›
$1,400 weekly is how much per year? If you make $1,400 per week, your Yearly salary would be $72,800. This result is obtained by multiplying your base salary by the amount of hours, week, and months you work in a year, assuming you work 40 hours a week. How much tax do I pay if I make $1,400 per week?
How much is 5% interest on $50,000? ›
5% APY: With a 5% CD or high-yield savings account, your $50,000 will accumulate $2,500 in interest in one year.
Where is the best place to invest $50,000 right now? ›
The best way to invest $50k will depend on your financial goals and risk tolerances. Creating a diversified investment portfolio is ideal for this sum as it will reduce overall risk. Some suggested investments include real estate, retirement planning, stocks, and shares.
How much interest will $50,000 earn in a year? ›
How much interest will I earn on £50,000? With £50,000 in Chase's easy access account paying 5.1%, you could earn £2,550.00 over a year, or £212.50 per month.
How much money do you need to make $50000 a year off dividends? ›
at an average 5% yield an investor will need $1 million in dividend bearing stocks to create $50K in income yearly. Let's take a look at seven stocks to consider that can get any investor to that goal with enough time.
Top 9 monthly dividend stocks by yield
| Symbol | Company name | Forward dividend yield (annual) |
|---|
| EFC | Ellington Financial | 12.91% |
| EPR | EPR Properties | 8.15% |
| APLE | Apple Hospitality REIT | 6.60% |
| O | Realty Income Corp. | 5.98% |
5 more rows4 days ago
20 high-dividend stocks
| Company | Dividend Yield |
|---|
| Insteel Industries, Inc. (IIIN) | 8.71% |
| Washington Trust Bancorp, Inc. (WASH) | 8.40% |
| Chord Energy Corp (CHRD) | 8.37% |
| First Of Long Island Corp. (FLIC) | 8.31% |
18 more rows4 days ago
Buy a low-cost index fund that tracks the S&P 500; your $100,000 could grow to $1 million in about 23 years. You'll get there even faster by investing additional funds. Add $500 monthly and reach $1 million in just 19 years. Of course, past results don't guarantee future outcomes, but history is on investors' side.
How can I double 100k in a year? ›
Doubling money would require investment into individual stocks, options, cryptocurrency, or high-risk projects. Individual stock investments carry greater risk than diversification over a basket of stocks such as a sector or an index fund.
How to make 10k a month? ›
private job at electronic
- The Top 11 Ways to Earn $10,000 in Passive Income Each Month : Make Money Online. ...
- Dropshipping: The Gateway to E-Commerce. ...
- Using Endorsem*nts to Earn Through Affiliate Marketing. ...
- Etsy Print on Demand: Innovation Meets Business. ...
- Real estate crowdfunding. ...
- Creating and selling digital products.
If you invest $50 per week, that's the equivalent of $200 per month, or approximately $2,400 per year. Over a 30-year period, that would result in more than $72,000 in savings. It's a good chunk of savings, but it isn't a life-changing amount. This is where the power of compounding comes into play.
Can I live off of 50 dollars a week? ›
If you haven't already been shopping for yourself and don't know where to begin, try a weekly budget of $50. This is half of what many frugal families with children spend, so it should be high enough for a single person to eat nutritiously even if you don't make every single meal from scratch.
How much is $100 a week in a year? ›
$100 per week adds up to $15,600 in three years
The first thing we need to know is how much $100 per week works out to on an annualized basis. There are 52 weeks in a year. That means that, after a full year of saving, $100 per week adds up to $5,200.
How much is 50 grand a year weekly? ›
$50,000 a year is how much a week? If you make $50,000 a year, your weekly salary would be $961.60.
