2 Vanguard Funds That Can Turn $450 Per Month Into $1 Million in 30 Years
Key Points
The Vanguard funds listed below charge low expense ratios that are less than 0.1%.
Investing regularly into these funds over the long term can potentially make you a millionaire.
Depending on your risk tolerance, you may want to track the entire S&P 500 or focus on the tech sector.
- 10 stocks we like better than Vanguard Information Technology ETF ›
Growing your wealth and becoming rich from investing doesn't have to be complicated. The key ingredient is savings. If you can afford to set aside money every month and invest it in the stock market, you can grow your portfolio over time. By just tracking the market's performance (or the tech sector as a whole) and avoiding the temptation to chase highly valued stocks, you can be confident that you'll grow your portfolio significantly in value over the long term.
There are a couple of fantastic exchange-traded funds (ETFs) from Vanguard that can be ideal ways to invest in the market over the long haul. Both the Vanguard S&P 500 ETF (NYSEMKT: VOO) and the Vanguard Information Technology Index Fund ETF (NYSEMKT: VGT) are solid investments. Below, I'll show you how investing $450 per month into these funds can grow to $1 million, after a period of 30 years.
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Vanguard S&P 500 ETF
The Vanguard S&P 500 ETF provides you with a low-cost way to track the S&P 500, which is a collection of the best stocks on U.S. markets. It's the ultimate no-brainer investment, and the fund has an expense ratio of only 0.03%. Rather than picking individual stocks, just invest in the best of the best. There's plenty of diversification with this type of investment, and historically, the S&P 500 has risen by an average of 10% per year.
Assuming that it continues to rise by around 10% per year, here's how a $450-per-month investment into the ETF might grow over the long term.
| Year | Investment Balance (Assuming 10% Growth) |
|---|---|
| 5 | $35,137 |
| 10 | $92,948 |
| 15 | $188,066 |
| 20 | $344,564 |
| 25 | $602,051 |
| 30 | $1,025,696 |
Table and calculations by author.
The challenge is, of course, staying committed and disciplined enough to be able to continually invest $450 each month. But if you're able to do so, the incentive is enormous, as it can put you on track to potentially build up a portfolio worth more than $1 million after 30 years.
Now, with the S&P 500 generating above-average returns for three consecutive years and trading at record levels, there's a valid case to be made that it may be overdue for a slowdown. If that happens, that could impact your long-term returns if you invest today.
However, tracking the index may still be an ideal option for risk-averse investors as the Vanguard S&P 500 ETF strikes a reasonable balance for people who want growth and safety. If, however, you're comfortable with a bit more risk, then you may want to consider the other ETF on this list.
Vanguard Information Technology Index Fund ETF
Investing in tech can be a great way to generate market-beating returns. The Vanguard Information Technology Index Fund ETF charges an expense ratio of 0.09% and in return for that, it gives you exposure to the top stocks in the tech sector, including Microsoft, Nvidia, and Apple.
The benefit is that when tech stocks are hot, this ETF is a big winner, and it vastly outperforms the market. Since 2023, this Vanguard fund has risen 140% and has dwarfed the 82% gains you would have generated if you simply tracked the S&P 500. The danger, however, is that in the event of a downturn, this fund can be vulnerable to sharp declines. Back in 2022, when the S&P 500 declined by more than 19%, the Vanguard Information Technology Index Fund fell by 30%.
In the long run, it may potentially outperform the market, but there's some added risk in exchange for that possibility. That means if you invest $450 per month into this fund, it could get you to $1 million quicker than with the Vanguard S&P 500 ETF, but it's not a guarantee.
If you have a high risk tolerance and are willing to stomach the volatility that can come with investing in the tech sector, then this fund may be a better fit for your portfolio. However, both of these ETFs have the potential to be great investments over the long haul.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. 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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