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The answer is yes. This Vanguard ETF can get you to a million dollars — and beyond.
There are many possible ways to become a millionaire. One of the best is simply investing in stocks — for the long term.
However, you don’t want to choose just any stock or buy a stock when it’s overvalued. That can leave many of us scratching our heads as to what we should do.
Enter the Vanguard S&P 500 ETF (FLIGHT -0.04%) — a simple S&P 500 index fund that can make you a millionaire.
Image source: Getty Images.
Here’s some information on what this ETF is and what it might do for you.
Meet the Vanguard S&P 500 ETF
First, the Vanguard S&P 500 ETF is an exchange-traded fund (ETF) — a fund that trades like a stock. It’s also an index fund, aiming to deliver the same performance (less its puny fees) as the S&P 500 index of 500 of America’s biggest companies. Its “expense ratio,” or annual fee, is just 0.03% — costing you $3 per year for every $10,000 you have in the fund.
How has this ETF performed in the past? Check out the table below — but remember that past results don’t guarantee future results. (Also, any low-fee S&P 500 index fund, such as those from Fidelity, Schwab, or other good financial companies, will have similar results.)
|
Period |
Average Annual Gain |
|---|---|
|
Past 3 years |
11.02% |
|
Past 5 years |
16.26% |
|
Past 10 years |
14.04% |
|
Past 15 years |
13.95%* |
Source: Morningstar.com, as of October 21, 2024. Chart by author.
*Since the Vanguard ETF hasn’t been around for 15 years — its inception date was Sept.7, 2010 — this figure is from the SPDR S&P 500 ETF (NYSE: SPY).
What’s in the Vanguard S&P 500 ETF?
Here are the Vanguard S&P 500 ETF’s top holdings, as of the end of September — and they will be the same for just about any other S&P 500 index fund, as well:
|
Stock |
Percent of ETF |
|---|---|
|
Apple |
7.25% |
|
Microsoft |
6.55% |
|
Nvidia |
6.11% |
|
Amazon.com |
3.56% |
|
Meta Platforms |
2.56% |
|
Alphabet Class A |
1.99% |
|
Berkshire Hathaway Class B |
1.73% |
|
Alphabet Class C |
1.64% |
|
Broadcom |
1.64% |
|
Tesla |
1.49% |
Source: Vanguard.com. As of September 30, 2024. Chart by author.
If you’re an admirer of the “Magnificent Seven” stocks, due to their impressive performances over many years, you may be happy to know that all seven — Apple, Microsoft, Google parent Alphabet, Amazon.com, Nvidia, Facebook parent Meta Platforms, and Tesla — are in the Vanguard S&P 500 ETF. If you buy shares of the index fund, you’ll have positions in all seven — plus 493 other big companies.
How can the Vanguard S&P 500 ETF get you to a million dollars?
How, exactly, might the Vanguard S&P 500 ETF grow your wealth to $1 million (or beyond)? Let’s crunch some numbers. And despite those delightful average annual returns in the table above that range from about 11% to 16%, let’s be more conservative.
The S&P 500 has averaged annual returns closer to 10% (ignoring inflation) over long periods. Over your particular investing period, it may average more or less. So let’s go with 8%. Here’s how your money can grow over time at that rate:
|
Growing at 8% for |
$7,500 Invested Annually |
$15,000 Invested Annually |
|---|---|---|
|
5 years |
$47,519 |
$95,039 |
|
10 years |
$117,341 |
$234,682 |
|
15 years |
$219,932 |
$439,864 |
|
20 years |
$370,672 |
$741,344 |
|
25 years |
$592,158 |
$1,184,316 |
|
30 years |
$917,594 |
$1,835,188 |
|
35 years |
$1,395,766 |
$2,791,532 |
|
40 years |
$2,098,358 |
$4,196,716 |
Source: Calculations and chart by author.
As the table shows, you might hit seven figures within 20 to 30 years, depending on how much you sock away, and if you do so every year. You might get to millionairehood even faster if you can save and invest even greater sums.
If you want to aim for even faster growth…
If you don’t want to concentrate all your long-term dollars on just the S&P 500, there are plenty of other exciting, high-performing ETFs to consider. Take a look at any of the following, for example, and perhaps park a portion of your portfolio in one or a few of them. Just know that when funds are focused more on fast-growing, high-tech companies, they can be more volatile.
- Vanguard Information Technology ETF (VGT)
- Vanguard Growth ETF (VUG)
- SPDR Portfolio S&P 500 Growth ETF (SPY)
- VanEck Semiconductor ETF (SMH)
However you invest your long-term money, be sure that you’re doing so to build a nest egg for retirement. A simple S&P 500 index fund may be all you need to do so.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Selena Maranjian has positions in Alphabet, Amazon, Apple, Berkshire Hathaway, Broadcom, Meta Platforms, Microsoft, Nvidia, and Vanguard Index Funds – Vanguard Growth ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, Tesla, Vanguard Index Funds – Vanguard Growth ETF, and Vanguard S&P 500 ETF. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.