1 Unstoppable Vanguard ETF That Could Turn $400 Per Month Into $790,000 With Next to No Effort
Investing in the stock market can help generate wealth that lasts a lifetime, and the best part is that you don’t need to be rich to get started. With the right investments, you can turn a few hundred dollars per month into hundreds of thousands of dollars or more over time.
If you’re new to the stock market or simply want a no-fuss investment that requires little effort, an exchange-traded fund (ETF) may be a smart bet.
There are countless ETFs to choose from, and everyone’s investing preferences will differ slightly. But there’s one Vanguard ETF that could turn $400 per month into nearly $800,000. Here’s exactly how to get there.
A safe yet effective long-term investment
There are never any guarantees when it comes to the stock market, but an S&P 500 ETF is one of the safest funds out there. This type of investment tracks the S&P 500 index itself, meaning it includes the same stocks as the index and follows its performance over time.
The Vanguard S&P 500 ETF (NYSEMKT: VOO) contains 505 stocks across 11 different industries, and these stocks are from some of the strongest companies in the U.S. — ranging from tech giants like Apple and Amazon to long-established brands like Coca-Cola and 3M.
There are several advantages to investing in an S&P 500 ETF. For one, because you’re investing in hundreds of different stocks across a variety of industries, you have an instantly diversified portfolio with just one investment. This can help reduce your risk, especially during periods of volatility.
The S&P 500 itself also has a perfect track record of recovering from market downturns and recessions. While that doesn’t guarantee that this ETF will survive whatever the future has in store, it’s extremely likely it will rebound from future slumps.
Finally, the Vanguard S&P 500 ETF offers a low expense ratio of just 0.03% per year, meaning that for every $10,000 in your account, you’ll pay $3 per year in fees. This is far lower than many other funds, a fact that could save you thousands of dollars in fees over time.
Building an $800,000 portfolio
Though the S&P 500 ETF is one of the safest, most reliable investments out there, it can still help you make a lot of money over time.
Since its inception in 2010, the Vanguard S&P 500 ETF has earned an average rate of return of just under 14% per year. However, because the market has been mostly thriving in that time, a more realistic return may be around 10% per year on average — which is in line with the historic average returns of the stock market itself.
If you were to invest $400 per month while earning a 10% average annual return, here’s approximately how much you could accumulate over time:
|
Number of Years |
Total Portfolio Value |
|---|---|
|
20 |
$275,000 |
|
25 |
$472,000 |
|
30 |
$790,000 |
|
35 |
$1,301,000 |
|
40 |
$2,124,000 |
Data source: Author’s calculations via investor.gov.
To reach $790,000 in total savings, you’ll need to invest consistently for around 30 years. While that’s a long time to wait, keep in mind that this investment requires next to no effort on your part. You never need to choose stocks, keep up with industry trends, or decide when to buy or sell. Simply invest whatever you can afford, then sit back and wait for your money to grow.
One downside to consider with this investment, though, is that you can’t earn above-average returns. The S&P 500 ETF aims to follow the market’s performance, so it can’t beat the market. If that’s a priority for you, investing in individual stocks could help you earn much higher-than-average returns over time.
The Vanguard S&P 500 ETF can be a fantastic choice if you’re looking for a low-maintenance investment that still packs a punch. With enough time and consistency, you could build a portfolio worth hundreds of thousands of dollars or more with next to no effort.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Katie Brockman has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Amazon, Apple, and Vanguard S&P 500 ETF. The Motley Fool recommends 3M and recommends the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.
1 Unstoppable Vanguard ETF That Could Turn $400 Per Month Into $790,000 With Next to No Effort was originally published by The Motley Fool
