As you save and invest for retirement, perhaps aiming for $1 million, be sure to invest your hard-earned dollars effectively. Take on too little risk, and you'll likely end up with a slow-growing portfolio. Take on too much risk -- such as with penny stocks or by day-trading or investing on margin -- and your portfolio might shrink instead of growing.
Consider parking some or most of your long-term dollars in index funds. They can make life easy, as you won't have to study the universe of stocks (and/or bonds), making buy-and-sell decisions. Instead, just keep adding money to one or more index funds and let their holdings do the work of growing for you over many years, if not decades.
Image source: Getty Images.
How money grows
The stock market has averaged annual returns of nearly 10% over several decades. But over your investing period, it could well average more -- or less. So the table below shows how your money could grow at several different growth rates:
|
Investing $1,000 monthly for |
Growing at 8% annually |
Growing at 10% annually |
Growing at 12% annually |
|---|---|---|---|
|
5 years |
$70,399 |
$73,261 |
$76,234 |
|
10 years |
$173,839 |
$191,249 |
$210,585 |
|
15 years |
$325,825 |
$381,270 |
$447,357 |
|
20 years |
$549,144 |
$687,300 |
$864,629 |
|
25 years |
$877,271 |
$1,180,165 |
$1,600,006 |
|
30 years |
$1,359,399 |
$1,973,928 |
$2,895,992 |
|
35 years |
$2,067,802 |
$3,252,292 |
$5,179,962 |
|
40 years |
$3,108,678 |
$5,311,111 |
$9,205,097 |
Source: Calculations by author, using Investor.gov.
You can see that amassing a million dollars is very achievable, as long as you have enough time and can regularly sock away some meaningful sums. You might even amass $2 million or more -- and for many people, that's a more appropriate nest egg to shoot for, especially if retirement is decades away. (It's smart to take some time to figure out how much you'll need for retirement -- and how you'll get it. Each of us needs a solid retirement plan.)
Nine index funds to consider
Here are nine promising index funds, in exchange-traded fund (ETF) form. ETFs are funds that trade like stocks.
|
ETF |
Recent dividend yield |
5-Year Avg. Annual Return |
10-Year Avg. Annual Return |
15-Year Avg. Annual Return |
|---|---|---|---|---|
|
Vanguard S&P 500 ETF (VOO) |
1.12% |
14.91% |
14.76% |
14.17% |
|
Vanguard Total Stock Market ETF (VTI) |
1.11% |
13.69% |
14.24% |
13.71% |
|
Vanguard Total World Stock ETF (VT) |
1.67% |
11.42% |
11.66% |
10.02% |
|
Vanguard Total Bond Market ETF (BND) |
3.78% |
(0.38%) |
1.92% |
2.36% |
|
Schwab US Dividend Equity ETF (SCHD) |
3.74% |
8.56% |
11.46% |
N/A |
|
Schwab US Large-Cap Growth (SCHG) |
0.36% |
16.97% |
18.18% |
16.72% |
|
VanEck Semiconductor ETF (SMH) |
0.30% |
28.96% |
31.04% |
24.33% |
|
Technology Select Sector SPDR ETF (XLK) |
0.53% |
19.89% |
22.53% |
19.50% |
|
Vanguard Information Technology ETF (VGT) |
0.41% |
18.99% |
22.71% |
19.62% |
Source: Morningstar.com, as of December 9, 2025.
Each of these funds tracks a different index. The Vanguard S&P 500 ETF (VOO 1.53%), for example, tracks the S&P 500 index of 500 of America's biggest companies. The Schwab US Dividend Equity ETF tracks the Dow Jones U.S. Dividend 100 index.
NYSEMKT: VOO
Key Data Points
Which funds are best for you?
You may be tempted to put much of your money in the funds with the fattest returns. But think twice before doing so. If there's a stock market correction or crash, growth stocks will likely fall harder than other stocks.
Remember, too, that some of the funds above are rather concentrated. The S&P 500 fund, for example, has fully 40% of its total value in just its top 10 holdings, and recently, about 8.5% in just Nvidia stock. That will serve the fund well (and has!) as long as Nvidia is going up.
Note, too, that the dividend yields vary widely. If you're looking for income, which is a solid goal, you won't get much from more growth-oriented funds.
You might do well spreading your dollars across several funds such as the ones above. I included a well-regarded bond fund, as well, if you'd like some exposure to bonds.
Whatever you do as you aim for a million dollars by retirement, be sure to have a plan and to stick to it.
