Maximize Your Roth IRA Potential with Warren Buffett's Favorite ETF
Maximize Your Roth IRA Potential with Warren Buffett's Favorite ETF
Want to be a millionaire retiree? There's a relatively simple way to achieve the goal. Learn from the master: That's good advice whether we're talking about developing negotiating skills, golfing, or playing the violin. It's also applicable to investing.
Answering three key questions
- Why is a Roth IRA a good alternative for investing your money? It provides a way to grow your portfolio tax-free. Over time, the gains from your investments should be greater than your contributions.
- How much do you have to contribute to max out a Roth IRA? For 2024, the max contribution is $7,000, increasing to $8,000 for those 50 or older.
- What is Buffett's favorite ETF? Likely the Vanguard S&P 500 ETF (VOO), as per his investment pattern.
By maxing out a Roth IRA with the Vanguard S&P 500 ETF, and with a calculated annual return, you could potentially amass $1.3 million.
Crunching the numbers
At the end of 30 years of investing $7,000 per year with a rate of 10.23%, you'd have over $1.3 million.
Two caveats
There's no guarantee that the Vanguard S&P 500 or the S&P 500 itself will achieve historical returns. Inflation can also erode the value of your money over time. Consistent contributions and Buffett's low-cost fund recommendation can help mitigate risks and grow your wealth.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.