There's this misconception that building a $1 million portfolio is a herculean task. If you wait until the end of your prime saving years, then it probably is. But given enough time and the right investment, it's not nearly as daunting as it seems.
The investment choice isn't that tough either. If you use a fund that's diversified, focuses on large well-established companies, and is ultra-cheap, you've got an investment that can get you to the promised millionaire status.
Perhaps the best choice for this is the Vanguard S&P 500 ETF (VOO 1.53%). It meets all of the above criteria and is one of the best wealth creation tools available to investors today.
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How to get to $1 million with the Vanguard S&P 500 ETF
If you've got $400 a month to invest in this exchange-traded fund, here's how you get to $1 million.
Let's assume that you can earn a 9% average annual return on this fund (the long-term historical average is closer to 10%, so this should be a reasonable assumption). Let's also assume that all dividends and distributions are reinvested, so you can maximize the benefits of compounding growth.
If you invest $400 a month under those conditions and keep investing for 35 years, your sum total at the end will be just over $1.17 million.
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Getting to this point, however, will require some discipline. This works best as a "set it and forget it" option. If you're tempted to sell whenever the market goes down, it's unlikely you're going to hit the million-dollar mark. But if you're able to consistently get $400 into your account every month and resist the temptation to trade or time the market, the title of "millionaire" can be yours in time.
