Could Buying This Index Fund Today Make You Rich Over the Next 30 Years?

Investors are currently experiencing one of the longest and most successful stretches in market history.

Following three consecutive years of 16%+ gains in the S&P 500 (SNPINDEX: ^GSPC), the index is on pace to do it again in 2026. Those who have been overweight in tech, growth, and artificial intelligence (AI) stocks have probably done even better.

While investors should certainly enjoy what's happening right now, it's important to maintain a long-term perspective. Recent gains shouldn't make people overly optimistic about going all in on the tech and/or AI themes. These strategies will almost certainly have their ups and downs over the next several years. Long-term strategies should focus on steady and consistent long-term wealth creation.

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A winning strategy: Focusing on quality and growth

Investing solely in tech stocks may provide higher capital appreciation potential. But it's also likely to produce higher highs and lower lows. And a high-growth strategy won't perform well in every market environment.

That's why I like the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) for long-term growth. Yes, it's a dividend stock fund, and that isn't always synonymous with growth. Its selection strategy, however, is built for both income and growth.

It selects from a universe of mostly large-cap dividend-paying companies with 10+ years of consecutive annual dividend growth. That strategy in isolation suggests a more conservative approach.

But its market-cap-weighting methodology actually tilts the portfolio back in the growth direction. It weights the portfolio not based on any dividend-related metric, but by company size. Any qualifying stock gets included, but the bigger ones get bigger weights.

That's why Broadcom, Apple, and Microsoft are the top three holdings with a combined weight of 14%.

Why the Vanguard Dividend Appreciation ETF can make you rich

The Vanguard Dividend Appreciation ETF's approach, which combines riskier growth elements with a more defensive income component, actually gives it a great chance at success.

The more conservative side of the fund, healthcare and consumer staples, for example, accounts for a combined 25% weighting -- helping to provide some downside protection and durability through rougher economic environments. But the 28% tech allocation provides the growth pop that's appropriate for longer-term buy-and-hold strategies.

Since its inception 20 years ago, this fund has produced an average annual return of just over 10%. If you assume that rate of return in the future, a $500 monthly investment made and held for 20 years turns into just short of $400,000. Do it for 30 years, and the end balance turns into $1.1 million. The Vanguard Dividend Appreciation ETF can make you rich indeed!

But it requires discipline and a long-term focus. Manage that, and you're well on your way to financial security.

David Dierking has positions in Apple and Vanguard Dividend Appreciation ETF. The Motley Fool has positions in and recommends Apple, Broadcom, Microsoft, and Vanguard Dividend Appreciation ETF. The Motley Fool has a disclosure policy.