If you don't have tens of thousands of dollars to invest in the market, you shouldn't get discouraged, even if you're planning for retirement. While having a big lump sum to invest right now would be great, you can also add to your investment over time to help pad your portfolio's growth. An ideal situation could be where you invest the same amount of money each month into an exchange-traded fund (ETF).

Below, I'll show you how you can grow your portfolio to $1 million by retirement based on the number of years you have left to retirement and different annual growth rates.

Invest in this ETF to simplify your strategy

The biggest obstacle in growing your savings over the years is getting lured into hot growth opportunities and investments that are a lot riskier than they might appear to be. While there are many thematic ETFs that can give you exposure to crypto, cannabis, artificial intelligence, and many other growth stocks, the safest and best approach can be just trying to mirror the markets. It may be a more boring option, but it can be an effective way to grow your portfolio without taking on significant risks.

The ideal fund for that purpose is the SPDR S&P 500 ETF Trust (NYSEMKT: SPY). Since the fund tracks the S&P 500 index, you'll get exposure to the top stocks on the market. Rather than stock picking or searching for top stocks to own, you can just add to your position in this fund, knowing that your investment is likely to continue going up in the long run. And with an expense ratio of 0.09%, it's a fairly low-cost ETF, which won't make a big dent in you overall returns.

In the long run, the S&P 500 has averaged a return of approximately 9.7%. But the growth rate can and likely will deviate from that. The good news, however, is that by mirroring the market, you'll be putting yourself in a good position to accumulate wealth over the years, whatever the actual growth rate turns out to be.

How much would you need to invest each month to get to $1 million?

There are three key variables to consider when determining what your portfolio's balance will be in the long run: how much you invest, how many years you have left to invest, and your average annual return. In this example, I'll use varying growth rates and years remaining to help determine what the monthly payment would need to be based on those factors.

Calculations by author.

It's impossible to know what the future growth rate for this or any other ETF will be, but at least by having an idea in mind of how much you would want to invest per month, you can set realistic expectations. By starting earlier in life and having more investing years to go, you have the advantage of time on your side, and the monthly payments are much smaller than when you are older. But later on in life, you may also have more income you can possibly set aside to invest.

Ultimately, you should try to find an amount that is manageable and that can be sustainable, even if it may seem low.

Investing regularly can help you stay on track to hit your goal

Regardless of how much you think you might need to invest, what's important is to try to keep up the habit of putting money in each month. Investing a large amount each month is not as important as ensuring that you're still trying to put in as much as you can. And if you have the opportunity to invest a big lump sum like a tax return, that can make up for months where you didn't invest as much as you planned or hoped.

Should you invest $1,000 in SPDR S&P 500 ETF Trust right now?

Before you buy stock in SPDR S&P 500 ETF Trust, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SPDR S&P 500 ETF Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $720,542!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of August 26, 2024

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Want to Get Your Portfolio to $1 Million by Retirement? Here's How Much You Should Invest Every Month was originally published by The Motley Fool