Most people would agree that being a multimillionaire has a nice ring to it. It's at that point that many people find themselves truly financially stress-free. Now, what if I told you that becoming a multimillionaire is absolutely possible in the stock market and doesn't take hitting big on a generational company?
Exchange-traded funds (ETFs) might not be as attention-grabbing as some high-growth individual stocks, but they can be just as effective at generating wealth in the stock market. And oftentimes, they come with much less risk while doing so.
One ETF that can be a multimillionaire maker is the Vanguard Total Stock Market ETF (VTI 0.09%). Of course, nothing is guaranteed in the stock market, but investing in the broader market has proven to be a great long-term investment strategy.
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Vanguard Total Stock Market ETF removes the need to divide and conquer
Vanguard Total Stock Market ETF gives investors exposure to the broader U.S. stock market. It holds over 3,500 stocks across all major sectors and sizes. This is what separates it from popular indexes like the S&P 500 and Russell 2000, which hold only large-cap and small-cap stocks, respectively.
Instead of focusing on specific companies, industries, sectors, or trends, investing in the Vanguard Total Stock Market ETF is banking on the growth of the U.S. stock market as a whole. And historically, this has been one of the better investments anyone can make.
NYSEMKT: VTI
Key Data Points
How Vanguard Total Stock Market ETF can be a multimillionaire maker
As with any stock, the path to becoming a multimillionaire with Vanguard Total Stock Market ETF lies in time and compound earnings. To see it in action, let's do a bit of math. Since its May 2001 inception, this fund has averaged 9.4% annual total returns. Over the past decade, returns have been more impressive, averaging 14% annually. For the sake of this illustration, let's assume Vanguard Total Stock Market ETF averages 10% annual returns for the long term, which aligns with the S&P 500's historical average.
If you were to invest $50,000 initially and then add $1,000 to it monthly, here's roughly how much your investment would grow to:
| Years | Investment Total |
|---|---|
| 20 | $1,023,600 |
| 25 | $1,721,900 |
| 30 | $2,846,300 |
| 35 | $4,657,400 |
Calculations by author. Investment totals rounded down to the nearest hundred. Source: Investor.gov.
If you were to cut the initial investment in half to $25,000, here's roughly how the investment totals would stack up:
| Years | Investment Total |
|---|---|
| 20 | $855,400 |
| 25 | $1,451,000 |
| 30 | $2,410,100 |
| 35 | $3,954,800 |
Calculations by author. Investment totals rounded down to the nearest hundred. Source: Investor.gov.
Admittedly, not everyone will have $25,000, $50,000, or any large sum of money to make an initial investment, but the broader point is how compound earnings can take consistent investments and turn them into substantial wealth as long as you have enough time on your side. Despite the inevitable volatility, trust what investing in the broader market can do for you.
