With the stock market continuing to soar, now is the perfect time to invest. The current bull market remains strong; S&P500 (SNPINDEX: ^GSPC) It has soared nearly 26% so far this year.
Looking for an easy way to add more to your savings? Exchange Traded Fund (ETF) (ETF) may be a smart choice. ETFs combine stocks into one investment, giving you exposure to hundreds of companies with little effort.
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The right ETF for you will depend on a variety of factors, including your risk tolerance and overall investment goals. For those looking for a strong growth ETF that can turn a few hundred dollars a month into more than a million dollars, this investment can get you there with little to no lifting of a finger.
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Proven superstar growth ETF
A growth ETF is a fund that only includes stocks that have the potential for above-average growth over the long term. Some are more niche, such as industry-specific ETFs or funds that include only funds. large stocksothers offer more variety and variety.
If you're looking for a slightly more secure option, Vanguard Growth ETF (NYSEMKT: VUG) It might be perfect for your portfolio. This ETF includes 183 stocks across 12 industries, but is heavily focused on the tech sector, with tech stocks accounting for nearly 58% of the fund.
One of the benefits of this particular ETF is that it aims for a balance between risk and reward. All stocks in the fund are large-cap stocks, with a median market capitalization of $1.4 trillion. The top 10 stocks in this ETF account for over 57% of the ETF total, and this list includes industry giants such as: apple, microsoftand Nvidia.
The remainder of the fund consists of 173 other stocks. Investing in more stocks can not only help you diversify your portfolio, but also increase your chances of buying winners. If any of these small-cap stocks become strong stocks, they could more than compensate for the underperforming stocks in the fund.
This balance of risk and reward allows you to maximize your returns while better protecting your savings. While giant companies like Apple and Microsoft are likely to weather market turmoil, small-cap stocks have the potential for explosive growth.
Build a $1.4 million portfolio
First, it's important to preface that growth ETFs are generally riskier than many other types of funds. This particular ETF limits some of that risk, but it's still going to be more volatile than, say, an S&P 500 ETF or an overall stock market ETF.
Before considering investing, ask yourself if you are comfortable with that level of volatility. Growth ETFs often see explosive gains when the market is booming, but they can take an even bigger hit during a recession. Growth ETFs can be a stressful investment if you're not comfortable facing more severe ups and downs.
That said, this type of investment can also help you earn much higher than average returns in the long run. The Vanguard Growth ETF has returned an average of 15.17% per year over the past 10 years. By comparison, the Vanguard S&P 500 ETF returned an average of just 12.96% annually, while the overall stock market has returned an average of 10% annually for decades.
Growth ETFs can be unpredictable, so there is no guarantee that the average annual return will continue to be 15%. However, even slightly above average returns can potentially make you a lot of money.
If you invest $400 every month, here's roughly how much you can accumulate depending on whether your average annual return is 11%, 13%, or 15%.
|
years |
Total portfolio: Average annual return of 11% |
Total portfolio: Average annual return of 13% |
Total portfolio: Average annual return of 15% |
|---|---|---|---|
|
20 |
$308,000 |
$389,000 |
$492,000 |
|
twenty five |
$549,000 |
$747,000 |
$1,021,000 |
|
30 |
$955,000 |
$1,407,000 |
$2,087,000 |
Data source: Author calculations via investor.gov. Table by author.
The most important thing to keep in mind when investing is that long-term prospects matter, and this is especially important with growth ETFs. It is inevitable that we will face a recession sooner or later, and even the most seasoned investors are often spooked by volatility. But by holding your investments for decades, you can weather the storm and reap long-term gains.
There is no one best way to invest, and everyone's approach will be different. But if you're looking for an investment that requires less effort and can give you big returns over the long term, the Vanguard Growth ETF could be a great option.
Don't miss out on this potentially lucrative second chance
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We currently have “double down” alerts on three great companies, and we may not see an opportunity like this again anytime soon.
*Stock Advisor returns as of November 11, 2024
katie brockman I have positions in Vanguard index funds (Vanguard Growth ETF and Vanguard S&P500 ETF). The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, Vanguard Index Funds – Vanguard Growth ETF, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has Disclosure policy.
1 An incredible growth ETF that can turn $400 a month into $1.4 million with little effort. Originally published by The Motley Fool
