Many people dream of being millionaires by the time they retire, and investing is a good way to make that happen. Even if you're not a particularly high earner and don't have a ton of money to put into the stock market, you'd be amazed at how much wealth you can grow over time with the right investment.
Now when it comes to building an investment portfolio for your senior years, you have choices. You could load up on individual stocks, or you could buy exchange-traded funds (ETFs), which let you own a bucket of stocks with a single investment.
The beauty of ETFs is that they make the investing process simple. Rather than having to research dozens of stocks, you can instead choose a broad ETF that lends to instant diversification in your portfolio. And one ETF in particular is a solid choice if your goal is to become a millionaire by the time your career comes to an end.
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The whole stock market at your fingertips
There are a number of ETFs that can help you generate serious wealth for your portfolio. But if you want to retire a millionaire, it pays to look at the Vanguard Total Stock Market ETF (VTI -0.21%). This ETF tracks the entire stock market, which means you get a mix of large-cap, mid-cap, and small-cap companies that make for a nice, diverse assortment.
Since its inception in 2001, the Vanguard Total Stock Market ETF has delivered an average annual return of 8.80%. Now this isn't to say that the fund has a strong year every year. That's just the way the stock market works -- some years are better than others. But over the past 20 years, the fund has performed very well.
Furthermore, the Vanguard Total Stock Market ETF has an expense ratio of 0.03%. That's a very low fee to pay. If you were to buy an actively managed mutual fund -- one that's run by a fund manager who hand-picks different stocks for it -- you could easily pay 10 times as much.
So how might the Vanguard Total Stock Market ETF make you a millionaire? Say you're able to invest $500 a month in that fund over 40 years. If the fund continues to deliver an average annual 8.8% return during that time, you'll wind up with over $1.9 million.
What if you can't squeeze out $500 a month? Even if you're only able to invest $300 a month during that time period, you'll still end up with over $1.1 million.
Get rich with minimal effort
The Vanguard Total Stock Market ETF isn't the only ETF out there that could make you a millionaire, but it's a great investment choice if you want instant diversification and you don't want to sink a lot of time into researching companies one by one. And if you start putting money into the Vanguard Total Stock Market ETF soon, you may be amazed at how much wealth you're able to grow over time.
