Compound interest can really change the game, turning consistent yearly returns of under 10% into significant wealth over time.
For those interested in well-diversified exchange-traded funds (ETFs) in 2026, the Vanguard Total Stock Market ETF can be a good option. This fund tracks the CRSP US Total Market Index, which includes all 3,498 companies listed on U.S. stock exchanges, providing a comprehensive portfolio.
This ETF offers exposure to leading artificial intelligence (AI) stocks like Nvidia and Amazon, as well as smaller growth stories like Lemonade, which had a remarkable 95% increase last year.
Generally, highly diversified ETFs yield lower returns compared to those tracking more focused indexes like the S&P 500 or Nasdaq-100. That said, the Vanguard Total Stock Market ETF holds potential for transformative results for investors buying in as we approach 2026. Here’s a thought on how you could potentially become a millionaire over time.
From towering giants to emerging small-cap stocks
This Vanguard ETF is market-cap weighted, meaning the larger companies within the fund have a bigger impact on performance. Currently, its top three holdings—Apple, Nvidia, and Microsoft—are valued collectively at $12.3 trillion.
Interesting, even with around 3,500 stocks, those three make up about 18.1% of the ETF’s total value. In comparison, those same companies account for 20.8% of the S&P 500 and 36.3% of the Nasdaq 100, which could explain why Vanguard ETFs haven’t performed as strongly as those indexes over the past five years.
On the flip side, the Vanguard ETF boasts a commendable 38.5% allocation to the technology sector, which includes not just the major players, but also Broadcom, Oracle, Palantir Technologies, and Advanced Micro Devices. It’s a decent way to tap into the growth spurred by the AI boom.
Additionally, there are several promising smaller growth stocks in this ETF that don’t feature in the S&P 500 or Nasdaq 100.
- Lemonade: A tech-driven insurance company utilizing AI to enhance customer interactions.
- Tenable: A frontrunner in the cybersecurity industry.
- Service Robotics: Collaborates with Nvidia to innovate in logistics with companies like Uber Technologies.
- Sprouts Farmers Market: Rapidly expanding with 460 organic grocery stores across 24 states.
The potential for becoming a millionaire
The Vanguard Total Stock Market ETF boasts a compound annual return of 9.2% since it began in 2001, but in the past decade, that figure has jumped to 14.2%, largely due to massive advancements in tech.
To illustrate how an initial $50,000 investment could grow to $1 million, here’s a breakdown based on various expected annual returns:
|
Annual Compound Interest Rate |
Time to Reach $1 Million |
|---|---|
|
9.2% |
34 years |
|
11.7% (midpoint) |
28 years |
|
14.2% |
23 years |
If a $50,000 lump sum isn’t feasible in 2026, here’s how investing just $500 monthly could help you build $1 million over time:
|
Annual Compound Interest Rate |
Time to Reach $1 Million |
Total Contributions |
|---|---|---|
|
9.2% |
31 years |
$186,000 |
|
11.7% (midpoint) |
26 years |
$156,000 |
|
14.2% |
23 years |
$138,000 |
It’s worth noting that while expecting the Vanguard ETF to sustain a 14.2% annual return indefinitely may be overly ambitious, the current momentum in AI suggests there could be stronger-than-average returns for the next few years, especially as these advancements spread to smaller companies.
Still, even a return to its long-term average of 9.2% could make this Vanguard ETF a path to becoming a millionaire in just 31 years.
