Could Alphabet stock help you retire as a millionaire?

Major online services alphabet (Nasdaq:GOOG) (Nasdaq: GOOGL) The company has created many millionaires over the years. If you had invested $15,000 when it went public in 2004, it would be worth more than $1 million today. SPDR S&P 500 ETF Trust (NYSE:SPY) instead, Total Return Just $105,000:

GOOGL Total Return Level data Y Chart

Google News The secret to a million dollar portfolio: time and patience

But it’s possible to build a million-dollar portfolio without a market-busting star: Take the index tracker’s 20-year compounded average return of 10.3% and invest modestly each month for a few more years.

For example, imagine Set up an automatic investment of $100 per month At age 20. There is no capital to start the portfolio, and contributions do not grow over time, they are left alone. S&P 500 (SNPINDEX: ^GSPC) Index trackers automatically reinvest your dividends into more shares in exchange-traded funds (ETFs) along the way.

While $100 a month is not a small amount, for most people who have a day job, the investment is small enough that 44 years later, by the time you reach a reasonable retirement age of 64, you’ll have invested a total of $52,800 in simple index ETFs. Thanks to the magic of compound interest, you’ll have about $1.07 million in your retirement account.

Google News The bigger it gets, the stronger the force of the fall

Many diversified mutual funds and ETFs Dealing in long-term investments Like the example above, you can set it and forget it and head to the bank smiling a few decades later.

But only a few stocks can withstand the strain. Seas rise, empires collapse, and even the most robust corporations are immune to unexpected downturns, shifting consumer tastes, and technological advances. Let’s look at some examples.

• At the turn of the millennium, General Electric (NYSE: GE) The company had a market capitalization of $508 billion, the second largest of all companies. To date, the industrial empire has split into three separate companies, and its market capitalization is roughly half of what it was in January 2000.
• Enron or Lehman Brothers There are many more dramatic examples of crumbling empires, and the list is long. Of the 1,925 stocks in the Russell 2000 Index, Stock Market History At least 25 years.
• I once bought a sofa with a lifetime warranty from what was once the world’s largest department store. Six months later, after a poor holiday season, Montgomery Ward filed for bankruptcy and liquidated the entire business. The company couldn’t handle the twin blows of big box stores and the early days of online shopping. So much for a lifetime warranty.

Google News Why Alphabet is Lasting

These examples make it clear that very few companies can be expected to continue thriving for decades. But there are exceptions, and I believe Alphabet is one of those few survivors.

Built to thrive in a variety of economies Alphabet’s extremely flexible umbrella structure gives it the ability to expand and explore different industries. If online search and advertising revenue dries up, Alphabet will turn to its Android smartphones, YouTube video platform, and Google Cloud distributed computing services in the short term, while promising side businesses like its Waymo self-driving taxi service, Calico medical research group, and Verily health data unit could take over the baton in the long term. Or Google Cloud could leverage its artificial intelligence expertise to run it instead.

Alphabet’s portfolio of promising business stars will change over time, and I probably haven’t even seen their best ideas yet. And that’s exactly why I think the company can operate for decades to come. I don’t recommend putting all your money in one basket unless you have a diversified fund in it, but if you must, Alphabet stock is at the top of my shortlist.

With its flexible business model and track record in building powerful technology solutions, Alphabet is well positioned to match or beat the long-term returns of the S&P 500. And if the company’s stock price can outperform the average S&P 500 return over the long term, you could reach your $1 million retirement goal even sooner.

And even a small increase in return can make a big difference 44 years later: Beating the Street average return by one percentage point could ultimately buy you a $1.5 million portfolio.

Export From Investor.govA service of the U.S. Securities and Exchange Commission.

Google News Should you invest $1,000 in Alphabet right now?

Before you buy Alphabet stock, consider the following:

of Motley Fool Stock Advisor The analyst team Top 10 Stocks Here are the stocks investors should buy right now… Alphabet isn’t one of them. These 10 stocks have the potential to generate huge profits over the next few years.

Things to consider NVIDIA This list was created on April 15, 2005…If you invested $1,000 at the time of recommendation, That comes to $652,342.!*

Stock Advisor With portfolio construction guidance, regular updates from our analysts, and two new stock picks every month, we provide investors with an easy-to-follow blueprint for success. Stock Advisor The service is More than 4 times First S&P 500 recovery since 2002*.

View 10 stocks »

*Stock Advisor returns as of May 13, 2024

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Anders Byland The Motley Fool has invested in and recommends Alphabet. The Motley Fool has invested in and recommends Alphabet. Disclosure Policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.