VYMI: Could This International ETF Make You a Millionaire?

If you want to make $1 million from stock investing, one of the simplest strategies is to buy a diversified portfolio of stocks and keep buying into the stock market over many years. And you don't have to stick to U.S. stocks to become a millionaire.

The Vanguard International High Dividend Yield ETF (NASDAQ: VYMI) is an international stock exchange-traded fund (ETF) that focuses on companies outside the U.S. with higher-than-average dividend yields. In the past year, this international stock fund has outperformed the S&P 500 index and the tech-heavy Nasdaq-100 index. And in the past three years, the VYMI has delivered average annual returns (by net asset value) of 23.1%.

Let's look at how the VYMI could make you a millionaire -- and how soon it might happen.

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What is the Vanguard International High Dividend Yield ETF (VYMI)?

The Vanguard International High Dividend Yield ETF owns 1,535 stocks around the world, and because of its emphasis on dividends, it tends to hold mostly large companies and value stocks. The VYMI's top 10 stocks include pharmaceutical companies, international banks, and well-known global consumer brands like Nestlé (OTC: NSRGY) and Toyota (NYSE: TM).

The fund's portfolio is invested all over the world, with 43.6% of its holdings in Europe, 26.4% in the Pacific, 21.1% in emerging markets, and 7.9% in North America. The top five countries represented are Japan (14.2% of the fund), the United Kingdom (11.4%), Canada (7.9%), Switzerland (7.3%), and Australia (6.7%).

Vanguard ETFs are known for charging low fees, and the VYMI is no exception -- the fund's expense ratio is only 0.07%. So for every $1,000 you invest in this ETF, Vanguard takes a fee of $0.70 per year.

Is the VYMI a millionaire-maker ETF?

There's no guarantee that the stock market will make anyone a millionaire. But if you keep investing in a diversified portfolio for the long run, good things tend to happen. The average stock market return for the S&P 500 index is about 10% per year over the past 50 years.

The Vanguard International High Dividend Yield ETF has done slightly better than that, with average annual returns of 11.7% since the fund's inception in February 2016. That strong growth rate can make millionaires.

Let's say you invest $500 per month in the VYMI, and your investment grows at that same average annual rate of 11.7% per year. After 15 years, you'd have about $218,000. After 20 years, you'd have about $417,000. After 28 years, you'd have over $1 million.

Past performance does not guarantee future results. The VYMI might not beat the S&P 500 forever. And having your portfolio 100% invested in stocks, even in the best stock ETFs, can be risky. But if you keep buying shares and the fund keeps delivering strong annual returns, the VYMI can make you a millionaire.

Ben Gran has no position in any of the stocks mentioned. The Motley Fool recommends Nestlé. The Motley Fool has a disclosure policy.