How to Turn $100,000 Into $1 Million for Retirement: 3 Smart Investment Strategies

There's no denying $1 million just isn't what it used to be. Sure, there was a time when that amount of money set a household apart from most others. Today, however, plenty of the country's 6 million cash millionaires -- people with investable assets of $1 million or more, not counting illiquid assets like real estate -- still feel like they're struggling when it comes to retirement savings.

Nevertheless, saving up a seven-figure stash certainly provides you with options and breathing room that can make funding your retirement a much less stressful affair. And most people can reach that goal, even on a modest income.

With that as the backdrop, here's a rundown of three investing strategies that could help you turn $100,000 into $1 million over the course of, say, 25 years. A very doable average annual gain of around 10% would do the trick, especially if you're able to add new money to the account along the way.

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1. Playing it straight

"Playing it straight" isn't a specific strategy. Rather, it's a philosophy. By playing it straight, you're utilizing the investing arena's most proven and important precepts like diversifying (and then regularly rebalancing) your holdings among various sectors, using passive index investing for at least some of your portfolio, sticking with quality stocks even through downturns, and minimizing your taxes and expenses. If you're adhering to all of the advice you read in a "how to" book for new investors, you're playing it straight. No flash. All function. It might be a little bit boring. But that's the point.

Obviously, past performance is no guarantee of future results, even for the most time-tested of strategies. However, this straightforward approach is likely to more or less mirror the overall market's average annual gain of around 10%. Better yet, it's apt to do so with a little less volatility.

2. Slow and steady dividend growth

A basic approach that limits volatility, however, isn't your only option for turning $100,000 into $1 million in less than 30 years. Dividend stocks can do the same.

It's true! Although dividend stocks are generally considered to be as slow-moving as they are boring, a handful of them have dished out heroic gains over the long haul. Take beverage behemoth Coca-Cola as an example. When reinvesting all the dividends it's paid during this time in more shares of the company since 1990, its net gains have essentially kept pace with the S&P 500, while Walmart has dramatically outperformed the benchmark index when factoring in its reinvested dividends during this time.

Data by YCharts.

These are obviously handpicked examples; plenty of dividend payers haven't done this well. These two names aren't likely to repeat the feat over the course of the coming 30 years either. They're both just too big now, making it tough to produce relatively greater growth.

Still, there are plenty of other great dividend stocks today that are where Walmart and Coca-Cola were 30 years ago.

And if you're wondering how these seemingly slow-growth companies' stocks perform so well when it seems like they shouldn't, researchers with mutual fund company Hartford explain, "corporations that consistently grow their dividends have historically exhibited strong fundamentals, solid business plans, and a deep commitment to their shareholders."

In other words, in the long run, quality shines through.

The trick here is just remaining patient enough to stick with the plan even when it feels like you may be missing out by doing so. Most of the upside of these dividends doesn't start showing up in earnest until well into your holding period.

3. Hold your nose and dive into aggressive growth

Or, you could go in the exact opposite direction and own nothing but growth stocks, and technology stocks in particular. This sector has easily outperformed the overall market over the course of the past 30 years, with the S&P 500 Information Technology Index averaging an annual gain of more than 14% during this stretch.

Data by YCharts.

A couple of major caveats come with the use of this strategy. Chief among them is a warning that it will undoubtedly prove more volatile than a more diversified approach to picking stocks. It could frighten you out of your positions at the worst possible time, in fact.

You should also know that limiting your holdings to the growthiest of growth names at any given time will require a lot of buying and selling on your part. Not only might this create a tax liability each time you make an exit, investors are notoriously bad at market-timing. You could easily make too many of your entries or exits at -- or at least near -- the worst possible time, ultimately undermining your long-term gains.

That's why you might want to make a point of just owning a tech-focused exchange-traded fund if you want to go this route, which should help you resist the constant temptation of chasing down the next hot stock. Your fund company will essentially do that for you.

4. Or, utilize the best of all three

Are none of these a plan you feel like you can afford to commit to for the next few decades? That's OK. You're not alone. Most investors probably shouldn't limit themselves to just one of these approaches for the long haul, in fact. Rather, you should be willing and able to employ all three, adjusting the extent of their usage to ever-changing market environments. Flexibility is crucial to sustained long-term success as an investor.

Just remain aware of the risk that doesn't go away, even if you can utilize a wide array of investing strategies. That's still the timing thing -- just as timing the market's ebbs and flows is difficult, it's just as challenging to know when it makes sense to switch up your approach. Always assume you don't actually know what the future holds (because you don't), and you'll usually end up getting the most out of these tactics with the least amount of risk.

James Brumley has positions in Coca-Cola. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy.