It may sound farfetched that a single investment could generate enough money to make you a millionaire in retirement, but it is possible with the right investment and a long-term approach to investing. The earlier you begin investing for retirement, the more time your investment has to work for you.

A great option to start building long-term wealth is an exchange-traded fund, or ETF, which allows you to invest in an entire index, providing diversification, transparency, and performance in a single low-cost investment. There are ETFs that invest in all of the major indexes, the various sectors, as well as segments or slices of the indexes.

If you have a long time horizon and are investing for retirement, you want a more aggressive growth option that you can buy and hold and not worry about. A great option is the First Trust Nasdaq 100 Equal Weighted ETF (NASDAQ:QQEW). It could just make you a millionaire when you retire. 

A retiree sitting on the floor with his piggy bank, smiling, with dollar bills flying around the room.

Image source: Getty Images.

This ETF differs from its competitors

The First Trust Nasdaq 100 Equal Weighted ETF is like its much more well-known competitor, the Invesco QQQ Trust (NASDAQ:QQQ), in that it tracks the Nasdaq 100 Index, which includes the 100 largest non-financial stocks on the Nasdaq Composite index with a heavy concentration in technology stocks.

It's different in that it's an equal-weighted fund, which simply means that all 102 holdings are equal-weighted at roughly 1% each. This provides the fund with more ballast during periods of high volatility than the Invesco QQQ, particularly during a sell-off or downturn. Considering that many of the names in the sector are running hot right now, potentially creating what some are calling a tech bubble, this strategy has some added appeal for investors.

The ETF was up 31% year to date as of Nov. 30 and has been a solid performer since it launched in April 2006. It has posted an annualized return of 16.4% over the last 10 years and 11.9% from inception through Nov. 30.

So, if you invested $10,000 in this ETF when it launched in 2006, and contributed $150 per month to it, you'd have about $110,000. If you invested $100 per month, you'd have roughly $95,000. But let's look longer term.

Is this ETF a millionaire-maker?

Let's say you're in your 30s and you're just starting to seriously think about retirement. It's still 30 years away, a least, so there is plenty of time to save and invest, but you don't want to put it off much longer. You have money in your 401(k) and you'll have Social Security at 67, assuming you wait until your full retirement age. You may have other investments for shorter-term goals, but you want at least one other investment entirely dedicated to retirement, so you invest in the First Trust Nasdaq 100 Equal Weighted ETF.

While we can't predict what type of returns it will have over the next 30 years, we can go back 30 years to track the performance of the Nasdaq 100. From Dec. 1, 1990, through Nov. 30, 2020, it posted an average annual return of 14.9% -- that includes the early 2000s tech bubble, the Great Recession, and the pandemic recession of 2020. Based on that annual return, assuming a $100 per month contribution, you'd have about $1.2 million.

There's no way to predict if the Nasdaq 100 will be able to churn out these same types of returns over the next 30 years, but the great thing about this index is it's not just technology names, although they currently make up about half of the index. It is made up of the largest non-financial companies in the Nasdaq, so the sector allocations will shift as economies and markets shift over the years. But it will always be focused on the biggest growth companies, with the added protection of an equal-weighted portfolio to make it less affected by wild market swings. That makes it a great option for long-term investors who just want to buy and hold until retirement.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.