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Is your goal to retire a millionaire? If so, you’re in good company. And in reality, a few million dollars isn’t an unreasonable goal for a retirement nest egg. Remember, the savings you carry into your senior years will need to last for several decades, and starting out with a couple of million or more is a good way to help ensure you don’t run out of money in your lifetime.
Furthermore, you may have the goal of becoming a millionaire before reaching your senior years. That’s a reasonable objective, too.
The key, either way, is to start investing at an early age and choose your investments wisely. And guess what? You don’t have to be an investing guru to check the latter box off. All you really need to do is put this one ETF in your portfolio.
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Your ticket to wealth
ETFs, or exchange-traded funds, make investing really simple. The reason? You can buy shares of a single ETF and add dozens of stocks or more to your portfolio. And if your goal is to wind up a millionaire, the Vanguard S&P 500 ETF (NYSEMKT: VOO) is a good bet.
The S&P 500 index consists of — you guessed it — 500 stocks, only they’re not just any stocks. Those 500 companies are the largest ones that trade publicly, so they’re a solid measure of how the stock market, on a whole, is performing. As such, an ETF that aims to match the performance of the S&P 500 is a good one to have in your portfolio.
Since its inception in 2010, The Vanguard S&P 500 ETF has delivered a 15.74% return, which practically mimics the S&P 500’s 15.78% return during that time. Say you invest $500 in this one ETF every month and its performance is comparable — let’s call it 15%. Keep that up for 30 years, and you’ll be sitting on a cool $2.6 million.
Even if the S&P 500 — and the Vanguard S&P 500 ETF — only delivers an average annual 10% return during that time, you’ll still be looking at just about $1 million in your portfolio from that investment alone.
Plus, the Vanguard S&P 500 ETF has a very low expense ratio — just 0.03%. That’s the beauty of ETFs — you won’t pay high investment fees that eat away at your returns because these funds are passively managed.
An easy way to accrue millions
The Vanguard S&P 500 ETF is only one of many ETFs that track the S&P 500. And to be clear, there are other indexes you could look at if your goal is to grow long-term wealth. But the S&P 500 has a strong history of delivering solid returns, and it’s a good bet if your goal is to become a millionaire without doing a lot of work to get there.
The one drawback of buying shares of the Vanguard S&P 500 ETF is that it won’t help your portfolio outperform the broad market. But if you’re happy with matching its performance, this ETF could make you very wealthy.
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Maurie Backman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
