If you don’t have a significant amount of savings built up right now, that doesn’t mean you can’t put yourself on a path to growing your portfolio to more than $1 million. You can invest while saving to help make the most of any money that you’re able to put aside into stocks.
A safer option than investing in individual stocks is to hold an exchange-traded fund (ETF) in your portfolio. It can give you an easy way to diversify without having to pick individual stocks, and you don’t have to worry about one individual holding having too large an effect on your overall returns. It can be an ideal investment option to help keep your overall risk low.
One ETF that can help you diversify while giving you exposure to many top growth stocks is the Vanguard Mega Cap Growth ETF (NYSEMKT: MGK). Here’s how investing $275 per month in that fund can set you up for some massive gains in the long run.
The ETF has averaged an annual return of more than 15% over the past decade
The benefit of investing in the Vanguard Mega Cap Growth ETF is that it focuses on the largest growth stocks in terms of market cap, including big names such as Apple, Microsoft, Nvidia, and many others. There are 71 stocks in total in the fund, and it won’t be as diverse as many other ETFs. But by loading up on the heavy hitters, investors can achieve some sizable returns without taking on too much risk. It charges a minimal expense ratio of 0.07%.
Over the past 10 years, the fund has achieved total returns (including dividends) of approximately 324%, which is much better than if you were to just mirror the S&P 500.
The ETF has returned 15.6% per year on an annualized basis. Growth stocks, and in particular, tech stocks, have performed exceptionally well in recent years. Investors may want to temper their expectations for the future, as that high a rate may not be sustainable for the very long term. But even if the ETF averages a more conservative return of around 10%, it can still be a solid option for long-term investors.
Turning $275 a month into a portfolio worth over $1 million
If you invest money each month into a high-powered fund such as the Vanguard Mega Cap Growth ETF, you can accelerate your portfolio’s gains much more than if you were to invest in some safe, slow-growing dividend stocks.
Assuming a 10% annual growth rate and a continued $275-per-month investment into the fund, here’s what your portfolio’s balance could look like over the years.
| Year |
Portfolio Balance |
|---|---|
| 10 | $56,332.37 |
| 15 | $113,979.35 |
| 20 | $208,826.43 |
| 25 | $364,879.19 |
| 30 | $621,634.18 |
| 35 | $1,044,075.46 |
Calculations by author.
If you can keep up the habit of investing $275 per month for the long haul, you can potentially get your portfolio to well over $1 million.
Ideally, you keep investing in the ETF as long as you can, but the payoff can be there even if you’re investing for just 10 years. During that stretch, you would have saved $33,000. But by investing into the high-powered fund, your portfolio could be worth more than $56,000 by that stage.
It’s not a guarantee, but in all likelihood you’ll be much better off putting money into a growth-focused ETF such as the Vanguard fund than you would be simply keeping it in a savings account with your bank.
Vanguard ETFs can make for easy investment decisions
Investing in a Vanguard ETF, whether it’s focused on mega-caps or other types of growth stocks, can drastically simplify your investing strategy by having a go-to fund to put money into on a regular basis. With low fees and good diversification, you can significantly reduce the risk you would otherwise have by investing in just individual stocks. While you can still pick individual stocks, a top Vanguard ETF can be a strong pillar to build your portfolio around, providing it with some good stability over the long haul.
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*Stock Advisor returns as of October 28, 2024
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool 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.
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