There might be a common misconception out there that investors must be skillful at picking individual stocks for their portfolios to achieve success. This just isn't true. A ton of available exchange-traded funds (ETFs) can provide investors with a passive strategy to take advantage of.
Many asset management firms offer these products. Vanguard is one of the most reputable. It's been around since 1975, and it had $11 trillion in assets under management (AUM) as of July 31. It might be a good idea to pick an ETF from this financial institution.
Investors should realize that serious wealth can still be generated by going the passive route. But can one of these Vanguard ETFs make you a millionaire one day?
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Impressive track record
The most popular investment vehicle offered by Vanguard is the Vanguard S&P 500 ETF (VOO -0.02%). It has $1.4 trillion in AUM, which showcases its gargantuan scale. As the name suggests, the ETF follows the performance of the S&P 500 Index. This benchmark consists of 500 leading companies that trade on U.S. stock exchanges.
The Vanguard S&P 500 ETF's performance is worth highlighting. In the past decade, it has produced a total return of 314%, which includes dividends. This translates to a fantastic 15.3% gain on an annualized basis.
It's clear how someone could've become a millionaire by owning this ETF. Had you invested $3,750 per month in the Vanguard S&P 500 ETF over the past decade (between September 2015 and September 2025), making a total of 120 allocations, you'd have $1 million today. This is the power of compounding and dollar-cost averaging. Extending the time horizon would result in more robust gains.
You would immediately think that to achieve such a stellar performance, the costs would be extreme. That's not the case, as the Vanguard S&P 500 ETF carries a low expense ratio of 0.03%. On a hypothetical $10,000 investment, just $3 would go to servicing the yearly fee.
Betting on American companies
Besides understanding the Vanguard S&P 500 ETF's performance and fee structure, it's extremely important that investors learn what exactly they'd be owning. The S&P 500 is the most-watched gauge of the stock market's performance. It provides exposure to all the sectors of the economy. Investors immediately gain solid diversification in their portfolios in a hassle-free way. The benefit gained by buying this ETF is that investors can avoid having to choose individual stocks that will be the winners of tomorrow.
In the past decade, there probably hasn't been a tailwind as impactful as the rise of global technology businesses. The stock market's returns are being driven by these dominant enterprises. The "Magnificent Seven" constitutes 34% of the Vanguard S&P 500 ETF's asset base, so there is some concentration at the top. Investors will have exposure to powerful secular trends that are lifting these companies, most notably artificial intelligence.
Patience is key
The Vanguard S&P 500 ETF's trailing-10-year returns have been incredible. There's no telling what sort of performance it will achieve in the decades ahead. However, I believe this investment product can turn you into a millionaire. Its long-term track record of compounding capital speaks for itself.
Just don't expect to get rich overnight. Successful investing, no matter what your exact strategy is, requires patience, maybe more than any other trait. Generating wealth takes time. Having the right mindset is critical.
It's also important to keep your emotions in check when there's heightened volatility or a market correction, things that are inevitable and can't be avoided. Keeping the attention fixated on the long term, as opposed to the next month or quarter, will also lead to success.
