원문 보기
$900,000 is roughly the amount we'll need if we want to retire by 2030. Looking at Nvidia stock, I want to know how many shares we need today to reach our goal of $900,000 and start living the life of our dreams by 2030. Let me show you the calculations so you can understand where that $900,000 figure came from .
First of all , we need to understand that we plan to retire in 25 years. The average length of retirement is actually about 18 years. So, this term will be longer as we hope to retire earlier. Further, the average American family spends about $60,000 each year on basic living expenses alone. But it is important to understand that these are costs as of 2022.
Given the inflation rate, which is usually around 2%, I have raised it to 3% as we are currently seeing very high inflation rates. So, let's consider an annual inflation rate of 3%. This results in our annual costs being around $78,000 by 2030. Now that we know this, let's move on to the final part— calculating your pension.
When we get $900,000 from Nvidia stock by 2030, we can invest it in something safer, like the S&P 500 index. That should earn us about 8% per year, adjusted for inflation, over the next 25 years, which means we need $1.95 million to make $78,000 per year in payments . You can see how it works year after year.
We withdraw that $78,000 and replace it with an 8% return on the S&P 500 index. If all goes according to plan, after 25 years of investing, we should be left with $153,000. This brings us to the question: how much Nvidia stock do we need if we want to live on it after we retire in 2030? Here's how I calculated it.
I took four different analysts or sites that made a long-term forecast for Nvidia and then placed them on a scale from the most pessimistic forecasts to the " superstar" ones that may have too much hype surrounding the stock. In any case, we will plot it all on a graph, and you can decide which one seems most plausible to you.
Just a small note: all of these projections do not take into account share dilution, buybacks, or dividend changes. At the time of this video, the stock price was around $212 and the market capitalization was around $530 billion . So, let's get down to business. Looking at our first forecast, we see an average annual growth rate of 8%, which is significantly lower than the company's current performance, but it still gives us a valuation of around $1 trillion .
This also suggests a final price of around $423.79. Obviously, 8% is much less than the growth rates we are seeing today, right? But you should understand that with such an assessment, there will be a significant compression of multipliers. This could mean that growth is slowing due to increased competition or that the price-to- sales ratio, for example, is moving from 20 to the industry average of 11 or 12.
So even if a company is growing rapidly and revenues continue to skyrocket, the amount investors are willing to pay as a multiple will still be affected. But I know what you want to know: How many stocks do I need, Tanner, assuming they only grow 8% per year? If you divide the current price by $900,000— the amount we need—you see that you would need about 2,124 shares to retire, or about $450,000 of investment at a price of $212 per share.
This will help you get closer to the $900,000 mark if you expect this exact scenario with stock valuation compression in the future. Now let's move directly to our next level of forecast, which belongs to the mid-range . This actually shows a 15% compound annual growth rate, or an estimate of about $1.8 trillion.
This also shows that by 2030, the price of this stock, without any dilution, share buybacks, or anything like that, will be around $745.79. Now, in my opinion, this forecast is a little more likely than the lower forecast. It's just too low. I believe they will definitely cost much more than $1 trillion, given the need for semiconductors in the future.
And I also don't think competitors will be able to ramp up power fast enough to take Nvidia's place in many of the sectors where they operate, such as gaming . But how many shares would we need if the price really rose to $1.8 trillion or $745 per share? Well, we can see if we divide our target 900,000 by this that it takes 1,207 shares to retire, or $256,000 if buying at the 212 valuation we're using today.
I want to note that although we are only in the middle category, we are already seeing estimates of $1.8 trillion. That's already more than Amazon, for example, but it's actually more likely than we might think. Between today and the end of 2030—that's over 8 years, understand? So, that's a huge amount of time to take advantage of compound interest and continue to grow in a market that is increasing every day .
Semiconductors may now be the most valuable resource in manufacturing, as we are already seeing computers embedded in even mattresses today . But leaving that aside, let's move on to the high end of the forecast, where we see 25% compound annual growth or a market cap of around $3.75 trillion . This also gives us a stock price of $1,523.56.
But the main question is: how many shares will we need? And that, when divided by 900,000, is always true, okay? This gives us the 591 shares needed for retirement, or $125,292 if bought at today's prices of $212 per share. And now I always want to accompany my “pure hope” categories with big caveats, okay?
The further out you make a prediction, up to 2030, the less likely these things are to come true. That is why many analysts do not even make predictions for 2030. They barely make forecasts for 2025, because the company's results can vary dramatically even from quarter to quarter. That said, it's still an interesting thought experiment, and it's all purely for fun, just to look at these numbers .
But if we look at the pure expectations category, we see a 32% compound annual growth rate and a market cap of $6.5 trillion, giving a stock price of around $2,579.30. I'll be very happy if that comes true, but let's look at the real amount: It only takes 349 shares to retire, or $74,000 if you buy at $212 per share.
So, friends, that was a complete prediction , okay? These are all different scenarios, from the most pessimistic to the most optimistic. However, it is important to note two things. First, this is just for fun and shouldn't be taken too seriously because, as I said, the predictions become very inaccurate over the long term.
And also the fact that all these calculations are made without taking into account taxes, is that clear? So depending on exactly how you invest in Nvidia stock, these numbers could change significantly when you sell due to capital gains taxes and things like that. But if you're looking for similar calculations for other stocks you might like, check out my video about SoFi where I talk about retiring with these stocks by 2030.
And if you haven't already , like this video and subscribe below if you want to see more financial content like this.
Comments 0