Becoming a millionaire investor may seem like something that's only possible for the ultra-wealthy or the Wall Street gurus of the world. However, with the right investing strategy, nearly anyone can get rich in the stock market.
Finding the right investments is easier said than done. But by investing consistently in this one ETF, you could potentially be on the path to becoming a multimillionaire.
Getting rich with ETFs
Sometimes the difference between becoming a millionaire and losing all your money is the type of investment you choose. The more risk you take on, the more money you can stand to earn. But take on too much risk, and you could lose everything.
ETFs (exchange-traded funds) can limit your risk because you're investing in many stocks at once. Most ETFs contain dozens or hundreds of stocks, so if a few of those companies don't perform well, it shouldn't have a drastic effect on your entire portfolio.
One ETF that could potentially make you rich is the ARK Fintech Innovation ETF (ARKF -3.60%). The number of holdings in this fund fluctuates, but it normally falls between 35 and 55 stocks in the fintech industry. Some of the largest stocks in the fund include Square, PayPal, and Zillow.
This ETF is relatively new, and it was established in Jan. 2019. Since then, however, it has achieved a remarkable 62% average annual rate of return. Over the past year alone, it has earned an incredible 108% return.
If you were to invest $100 per month in this fund earning a 62% annual rate of return, you'd have nearly $2.7 million accumulated within 15 years. If you were to save slightly more -- say, $150 per month -- you'd end up with more than $4 million in that same time period.
Is this ETF right for you?
Before you invest your life savings in this fund, it's important to think about your risk tolerance.
The fintech industry can be volatile, so this ETF is on the riskier side of the scale. While you can experience enormous returns, be prepared to experience losses as well. There are never any guarantees in investing, but this is especially true when it comes to riskier investments.
In addition, the ARK Fintech Innovation ETF has a relatively short track record. While its returns have been fantastic so far, it's impossible to say how this fund will perform over the long run.
This isn't to say that this ETF isn't a good investment. If you're willing to take on higher levels of risk for the potential to earn substantial rewards, this fund might be the perfect investment for you. But if you're extremely risk-averse, it may not be the best fit.
Before you invest...
If you do choose to invest in this fund, make sure you have a well-diversified portfolio. You may consider building a core portfolio of broad-market index funds, for example, and then invest any leftover cash in the ARK fund. That way, if the ARK fund doesn't perform well, it won't sink your entire portfolio.
The ARK Fintech Innovation ETF has experienced extraordinary returns, and investing now could make you a multimillionaire down the road. Just be sure you understand the risks before you invest. With the right strategy, you could potentially make a lot of money with this investment.