Could Investing $10,000 in SCHB Make You a Millionaire?

Recent stock market volatility and worries about an artificial intelligence (AI) bubble are driving many investors to diversify. If you want an easy, low-cost way to own a broadly diversified portfolio of stocks, the Schwab U.S. Broad Market ETF (NYSEMKT: SCHB) could be a solid choice.

This low-cost index fund charges a rock-bottom expense ratio of only 0.03%, and it gives you exposure to the biggest U.S. stocks. But can it make you a millionaire? SCHB has a long track record of strong growth that could get you there -- if you're patient.

Let's see why SCHB could be a good choice for future millionaires.

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SCHB has more than 16 years of annual returns averaging 14.09%

The Schwab U.S. Broad Market ETF owns 2,398 stocks and intends to track the performance of the Dow Jones U.S. Broad Stock Market Index. If you want to buy a total stock market ETF that lets you own a diversified range of U.S. stocks, SCHB fits that purpose.

The fund's top 10 holdings are mostly major tech stocks like Nvidia (6.8% of the fund), Apple (5.9%), and Microsoft (4.4%). Almost 33% of the fund's holdings are in the Information Technology sector. The only non-tech stock in the top 10 holdings is Berkshire Hathaway Class B.

SCHB was launched in November 2009, and the past 16 years since then have mostly been a good time to own U.S. stocks and especially major tech names. The ETF has delivered average annual returns (by net asset value) of 13.66% in the past 16 years since inception. That's significantly better than the stock market's usual long-term average return of 10% per year.

SCHB: How fast can your money grow to $1 million?

There's no guarantee that any stock ETF can deliver returns high enough, consistently enough, for long enough to make you a millionaire. But let's assume that the SCHB track record of 13.66% average annual returns can keep going for a while longer.

If you invested $10,000 into SCHB and left your money alone to compound, your money would grow to $129,465 after 20 years. After 30 years, you'd have $465,832. And after 36 years, you'd reach $1 million.

This is a powerful example of how just by investing in U.S. stocks through a broadly diversified index fund like SCHB, patient long-term investors can build substantial wealth. SCHB could be a good choice if you want a low-cost total U.S. stock market index fund in your portfolio.

Ben Gran has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Microsoft, and Nvidia and is short shares of Apple. The Motley Fool has a disclosure policy.