History Says This Vanguard ETF Could Be Your Ticket to a Million-Dollar Portfolio

Stock picking is a fantastic way to build wealth over time, and it allows you to design a portfolio that truly fits your investment style -- whether you're an aggressive or cautious investor or fall somewhere in between. But you don't have to stop there. Another asset could be the perfect complementary addition to the mix as it offers you exposure to many stocks with one simple buy. I'm talking about an exchange-traded fund (ETF).

These funds are designed according to various themes, from biotech to retail or artificial intelligence (AI), or they may replicate the performance of a major index like the S&P 500. And one particular type of ETF could even result in enormous growth over the long term. In fact, history says this Vanguard ETF may be your ticket to a million-dollar portfolio. Let's find out how to get in on this fantastic wealth-building opportunity.

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ETFs and stocks

First, though, a quick look at how ETFs work. If you've mainly invested in stocks or are completely new to investing in general, don't worry -- you can buy ETFs as you would buy a stock. Like stocks, they trade daily on the market and are available through various brokerages and trading platforms.

As mentioned, ETFs are constructed around a particular theme, offering you exposure to a large number of players within the space. This is great because it offers you instant diversification -- if one or a handful of companies lags behind, others may compensate, and as a result, this diversification limits risk.

The one thing to be aware of when investing in ETFs, though, is they do carry fees, and these are expressed as an expense ratio -- stick with ETFs with an expense ratio of less than 1% and you'll minimize your costs over time.

Now let's consider the Vanguard ETF that could shepherd you along the road to millions. I'm talking about the Vanguard S&P 500 ETF (NYSEMKT: VOO), a fund that tracks the performance of the major benchmark. This means that it reflects the composition of the index, holding shares of the top 500 players driving today's economy. And since the index -- and therefore the fund -- rebalances quarterly and may add or subtract members, if you invest in the Vanguard S&P 500 fund you'll always be invested in the most important companies of the times. Another plus: This ETF is well suited to any investment style as it offers you positions in such a wide range of stocks and industries.

The industry that stands out

Today, considering the strength of technology players, particularly in the industry of AI, these companies are most heavily weighted -- at 34% -- in the index and the fund. But even at times like these, when one particular industry stands out, the fund is well diversified as it includes 11 industries. So, by investing in this Vanguard fund, you aren't depending on the success of just one area and instead are exposed to a number of potential winners.

History shows us investing in the S&P 500 has been a smart bet as the index has delivered a 10% average annual return since its emergence as a 500-company index in the late 1950s. And this brings me to the recipe for a portfolio that potentially may reach $1 million. This involves regular investing in the Vanguard S&P 500 ETF over time to take advantage of the benefits of compounding.

Here's an example, considering the S&P 500 continues to deliver an average annual gain of 10% into the future. If you make an initial investment of $1,000 in this fund, then every month for the coming 35 years you add $300 to it, the value of your investment may grow to $1 million.

If your investing horizon is shorter, don't worry. You can apply this strategy for fewer years and still register a significant gain -- and it's important to remember that stock picking is a key part of investing too, and as I mentioned above, can be paired with ETF investing to potentially supercharge your returns.

So, if you're able to regularly invest in the Vanguard fund for many years, history offers us reason to be optimistic about the results -- and it could even be your ticket to a million-dollar portfolio.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.