IRA-SPDR S&P 500 ETF Trust

       Most Americans don't think they have enough saved for retirement, either they started to late or don't know of different investing opportunities out there. Thanks to the invention of exchange traded funds ordinary people can acquire extraordinary wealth in retirement by saving just $500 a month and watching their money multiply, they can become millionaires. State Street Global Advisers created a great investment category when they created the first exchange traded fund SPDR S&P 500 ETF Trust (SPY) in 1993. Currently there is over 4.5 trillion dollars in ETF's around the world. SPY trades like a stock on the New York Stock Exchange allowing investors to buy and sell when they want. SPDR S&P 500 ETF can be  acquired through a traditional broker. SPY mimics the growth of Standard and Poor 500 index, a group of large cap U.S. stocks. There are no load fees and an expense ratio of .0945%. Since its inception in 1993 SPY has an annualized average return of 9.70% compared to 9.85% of the S&P 500.

       The histogram above displays the returns of SPY after 100 simulations on a monthly basis for 30 years. SPY has a mean monthly return of 0.85% and a standard deviation of 4.1% since inception. As you can see the curve is skewed right with a fat tail, a good opportunity for investors. The lowest simulated return of 350,000 dollars on a basis of 180,000 which is 500 dollars a month for 30 years still provides a return on investment of nearly 100%. The highest return was over 3 million dollars, with 57 of the 100 results over a million dollars.

I advise you to invest in SPY for retirement in an Individual Retirement Account. Using monthly historical prices of SPY since its inception we can calculate the probability of different returns for the index. Lets assume you invest $500 every month for the next 30 years in an IRA, based on historical data 100 simulations using 360 random individual monthly returns using standard deviation and mean that small monthly investment will on average grow to 1.16 million, an return on investment of 545%. The mean displays the scenario that is on average the result. It is calculated by taking all 100 results of the simulation and dividing by 100, the total input. We can further use the mean and standard deviation, a measure to quantify variation in a set of data, to calculate that 66% of investors who invest $500 a month in SPY in an IRA for 30 years will obtain a value between approximately 400,000 and 1.6 million dollars. Assuming stocks follow a normal distribution ninety-five percent of investors will see wealth between $1,817 and $2.1 million. Since stocks don't follow a normal distribution the returns on the low end left side are further negative then what would realistically occur because of the high upside of growth of the investment on the the right side. This allows investors to fund a wealthy retirement on only $500 a month because of SPY capturing the upside of the market while minimizing the risk.