Investing periodically into the stock market is a good habit to create for a couple of reasons. First, it eliminates the temptation to try and time the market, which can be time-consuming and result in your missing out on gains along the way. Secondly, if it becomes part of your regular budgeting process to set aside a certain amount of money for investing, that can help ensure you are hitting your investing goals without having to worry about building up a big lump sum first.
A good amount to aim for may be $250 per month, which translates into $3,000 per year. That can be enough to generate some strong gains over the long haul. And if you can afford to invest more than that, that's even better -- your portfolio balance can get even bigger.
Below, however, I'll show you how a $250-per-month investment in a top exchange-traded fund (ETF) can grow over a period of 10, 20, and 30 years.
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A top Vanguard ETF that can be ideal for monthly investments
The Vanguard Growth Index Fund ETF (VUG 0.37%) is a great fund to invest in, as it gives you access to some of the best growth stocks in the world, and its fees are low, with an expense ratio of just 0.04%. This allows your portfolio to grow in value without worrying about fees taking a big chunk out of your returns.
Since the ETF invests in large growth stocks, you also don't have to worry about having exposure to risky investments. Through the fund, you'll have a position in some of the biggest stocks in the world, including Tesla, Meta Platforms, and Nvidia, which are among its largest holdings.
Putting money in the Vanguard Growth Index ETF each month can be a good option for investing over the long haul, given that growth stocks can amass significant gains. While they may sometimes experience significant declines in a bear market, there can be a big payoff from investing in these types of stocks for not just years but decades.
How monthly investments in the ETF could grow over decades
The challenge when forecasting what your portfolio may look like over a long time frame is that so much depends on the growth rate and how well the market will do in the future. It's not an easy thing to predict. But given that the long-run average of the market is around 10%, in the table below, I've factored in bearish, bullish, and average market conditions, where your investment grows between a rate of 9% and 11%.
| Year | 9% Growth | 10% Growth | 11% Growth |
|---|---|---|---|
| 10 | $48,741 | $51,638 | $54,747 |
| 20 | $168,224 | $191,424 | $218,393 |
| 30 | $461,119 | $569,831 | $707,557 |
Table and calculations by author.
As you can see from the table above, there can be a significant difference, in the neighborhood of a couple hundred thousand dollars, between averaging a 9% return over 30 years versus an 11% return. This is why it can be key to focus on growth stocks, which have a higher likelihood than, say, dividend stocks or more value-oriented investments, in outperforming the market. Investing in a fund such as VUG can increase the odds that your return is potentially better than the market average.
But regardless of what your actual portfolio ends up becoming, it's clear that investing regularly in the stock market can be a great move for the long term and lead to you being in a stronger financial position in the future.
