Transforming an initial investment of $10,000 into $12 million might sound like a stretch, but it really isn’t out of reach. With some time on your side, a couple of high-growth exchange-traded funds (ETFs), and a strategy of dollar-cost averaging, it’s doable.
If you started with $10,000 in an ETF and then contributed $2,000 every month for 30 years, you could potentially rack up over $12.5 million with an average annual return of about 15.3%. This figure is based on the historical average return of the S&P 500 over the past decade. Of course, that doesn’t guarantee the S&P 500 will perform at that rate for the next ten years, but it’s reasonable to think the overall return of the market index will remain somewhat stable, barring any major economic shifts.
ETFs are designed to align with a specific risk-reward profile, which is why average returns tend to stay similar over time. Let’s examine three growth-focused ETFs that have outperformed the S&P 500 over the last ten years and might well push those numbers even higher.
Invesco QQQ Trust
While investing in an S&P 500 ETF can certainly build wealth — even approaching $12 million — the Invesco QQQ Trust has consistently outperformed that benchmark. It has achieved a cumulative return of 536.4% over the past decade, averaging 20.3% annually, while the S&P generated a cumulative return of 315.3%, averaging 15.3%. That’s a significant gap.
What’s striking is that the Invesco QQQ Trust outperformed the S&P 500 more than 87% of the time on a rolling 12-month basis during this period, indicating consistent performance rather than occasional spikes.
This ETF includes leading companies in the artificial intelligence (AI) sector. Although AI is still evolving, it appears well-positioned for future growth.
Vanguard Growth ETF
Another great option is the Vanguard Growth ETF. It has outshone the S&P 500 as well, largely because growth stocks have generally outperformed value stocks over the last decade. Essentially, this ETF tracks the growth side of the S&P 500.
Comparing its performance to that of the Vanguard Value ETF, the dominance of growth ETFs is impressive. Over ten years, growth ETFs delivered an annual return of 18%, while value ETFs managed only 12.1% annually.
The Vanguard Growth ETF is set up well to continue outpacing the S&P in the next decade, focusing on growth-oriented sectors like technology and consumer spending, while minimizing exposure to financial and industrial sectors.
Vanguard Information Technology ETF
If you’re looking to aim even higher, the Vanguard Information Technology ETF could offer substantial profits. This fund narrows its focus to technology stocks, notably strong performers like Nvidia, Apple, and Microsoft. Together, they make up nearly 44% of the ETF, with Nvidia alone representing over 17%. This level of focus does add some risk, but it can also boost potential gains.
The average annual return for this ETF has been 23.4% over the past decade, making it one of the best among Vanguard offerings.
If you recalibrate for a 23.4% annual return based on a $10,000 investment plus $2,000 monthly for 30 years, the ultimate return could soar to an eye-popping $67.5 million. Sure, that kind of gain might be a long shot, but it still underscores the power of consistent investing and compounding over the long haul.
As technology continues to evolve and influence our lives, investing in growth-focused ETFs with ample tech exposure seems like a wise move. The beauty of these ETFs is that you don’t need to fret about selecting individual stocks; you can simply set your investments to run on autopilot.
