Investing in the stock market isn't always easy, but with the right investments, it's one of the safest and most effective ways to build long-term wealth.
While there's no single right way to invest, exchange-traded funds (ETFs) can be a smart option for many people.
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An ETF is a basket of securities rolled together into a single investment. So when you invest in just one ETF, you're actually investing in dozens of stocks, or even hundreds. Each ETF is slightly different, offering exposure to different types of stocks and industries.
A growth ETF contains stocks with the potential to earn above-average returns, making it an ideal choice for investors who want the relative safety and convenience of an ETF while still maximizing their earnings.
There are countless different ETFs to choose from, all with unique advantages and disadvantages. But there's one in particular that could help you turn just $100 per week into more than $1.15 million over time: the Vanguard Growth ETF (VUG 1.82%).
Why this ETF is such a strong investment
The Vanguard Growth ETF contains 235 stocks across 11 different sectors, though around half of the fund is made up of technology stocks. It also offers a rock-bottom expense ratio of just 0.04%, which is far lower than many other ETFs and could save you thousands of dollars in fees over time.
One factor that sets this growth ETF apart from many others, though, is its mix of blue chip stocks and up-and-coming companies.
Roughly half of this ETF consists of the stocks of behemoths like Apple, Nvidia, and Visa. These might be less likely to experience explosive growth, but their sheer size and proven track record also make them lower-risk investments.
The rest of the fund is made up of dozens of stocks from smaller companies. These tend to carry more risk, but they also have more potential for substantial growth. If even one of these stocks skyrockets, you could see significant earnings.
Building a million-dollar portfolio
The key to making a lot of money in the stock market is to invest consistently and keep a long-term outlook. Even the best stocks won't make you a millionaire overnight, but over decades, your earnings will add up.
Over the past 10 years, the Vanguard Growth ETF has earned an average rate of return of just under 15% per year. To play it safe, though, let's assume your investments only earn average returns of 12% per year (which is just above the stock market's historic 10% annual average).
If you were to invest $100 per week while earning a 12% average annual return, here's approximately how much you would have over time:
| Number of Years | Total Savings |
|---|---|
| 20 | $346,000 |
| 25 | $640,000 |
| 30 | $1,158,000 |
| 35 | $2,072,000 |
Data source: Author's calculations via Investor.gov.
To reach the million-dollar mark, you'll need to invest consistently for around 30 years. But if you have even five more years than that to invest, you could roughly double your total savings.
Just keep in mind that there are never any guarantees when investing, and how much you actually earn will depend on how this fund (and the market as a whole) performs over the coming decades. But by investing consistently and keeping a long-term outlook, you could earn more than you might think.
Risks to consider before you buy
No investment is perfect, so no matter what you buy, it's important to also think about the potential downsides.
One disadvantage to ETFs in general is that you have no control over the stocks within the fund. For many investors, the ease and simplicity of ETFs outweigh this factor. But if there are certain stocks you'd rather not own, there's no way to opt out of those specific companies.
Also, growth ETFs are generally riskier than broad-market funds, such as an S&P 500 ETF. This particular fund aims to reduce that risk with a healthy amount of diversification across multiple industries, but high-growth companies are often more volatile than their more-established counterparts.
A growth ETF can be a solid addition to your portfolio, but it's important to weigh the pros and cons before you buy. If you're looking for one that can help limit your risk while still giving you the potential for above-average returns, the Vanguard Growth ETF could be a smart option.
