The past year has been a wild ride for the stock market, and if you're nauseated by the roller coaster of ups and downs, you're not alone.
Volatility is tough to stomach, especially when many experts are still warning about an impending recession. While nobody knows how the market will fare over the short term, there is positive news: A bull market is on the way.
The best time to prepare for a bull market is when stock prices are still relatively low, so that you can load up on quality investments at a discount and then watch your portfolio soar when prices rebound. And there's one exceptional growth ETF to buy right now: the Vanguard Growth ETF (VUG -0.24%).
When will the next bull market begin?
The bad news about the stock market is that it's unpredictable in the short term, so nobody (even the experts) can accurately predict what will happen over the following weeks or months.
The good news, though, is that every single downturn in history has eventually given way to a bull market.
Because we don't know precisely when the next upswing will begin, the best thing you can do right now is continue investing consistently and simply wait for the recovery period. Successfully timing the market is next to impossible, and if you're waiting until prices start to rebound before you buy, you could miss out on a lot of money.
The market can fluctuate wildly from month to month, so it's tough to know when we're in a bull market until prices have increased substantially. By investing when the market is still in a dip, you can take full advantage of the inevitable upswing.
The right ETF to maximize your earnings
Investing during the market's low points is only one part of the equation. It's just as important to choose the right investments, because not all stocks will be able to recover from periods of volatility or a recession.
The Vanguard Growth ETF, though, is a fantastic choice for a variety of reasons:
- Ample diversification: This fund contains 253 stocks, which provides plenty of diversification and can limit your risk. Also, while around 46% of the fund is allocated to stocks in the tech sector, it also includes a variety of other industries, including consumer discretionary, industrials, healthcare, and more.
- Low fees: The expense ratio determines how much you'll owe in fees each year, and this ETF's is just 0.04%. That's substantially lower than the average among growth ETFs, and it could save you thousands of dollars in fees over time.
- Solid track record: This fund was created in 2004, which is a longer history than many other growth ETFs. Vanguard is also an established, trusted name in the investing world, which can provide further peace of mind.
Perhaps the best aspect of this fund, though, is its healthy mix of blue chip and up-and-coming growth stocks.
Roughly half of the fund is made up of household-name companies, such as Amazon, Apple, Mastercard, and Home Depot. These stocks may experience faster-than-average growth, but they're also juggernauts in their respective industries -- making them far less risky than smaller growth stocks.
But this ETF also contains dozens of up-and-coming stocks with the potential for extreme growth. Stocks like these may be more volatile, but they could also see far higher returns than the established blue chips.
In other words, this fund has a healthy balance of both risk and reward. The smaller stocks could increase your earnings exponentially, but on the chance that a few of them don't survive this downturn, the big names in the fund will ensure your portfolio isn't hit too hard.
How much can you earn with this ETF?
Because the short term may be volatile, it's important to keep a long-term outlook when investing in the stock market.
Over the past 10 years, this fund has earned an average rate of return of 13.43% per year. Because we've enjoyed a phenomenal bull run over the past decade, let's assume it will earn slightly less than that in the future, for argument's sake.
If you were to invest, say, $300 per month while earning an 11% average annual return (which is just slightly higher than the market's historical average), here's approximately how much you could accumulate over time:
Number of Years | Total Savings |
---|---|
20 | $231,000 |
25 | $412,000 |
30 | $716,000 |
35 | $1,230,000 |
40 | $2,095,000 |
By investing consistently and giving your money plenty of time to grow, you could build a portfolio worth well over $1 million. And if you're able to invest more per month (or if this fund earns much higher-than-average returns in the future), you could earn even more.
Nobody knows exactly when the next bull market will begin, but it's coming. By investing now when prices are still lower, you'll be in a fantastic position to take full advantage of the market's inevitable upswing.