1 Growth ETF That Could Turn $100 Per Month Into $788,000
Key Points
ETFs provide broad diversification while minimizing risk.
The Vanguard Growth ETF provides exposure to large growth stocks as well as emerging growth stocks.
- 10 stocks we like better than Vanguard Admiral Funds - Vanguard S&P 500 Growth ETF ›
If you want to retire with money in the bank, it's important to start early and invest consistently. There are many strategies for success, and one popular way of saving for retirement is investing in exchange-traded funds (ETFs). ETFs provide easy diversification, often at a low price, and ETFs that track indexes can provide steady gains over many years or even decades.
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One excellent choice is the Vanguard S&P 500 Growth ETF (NYSEMKT: VOOG). This ETF takes the highest-growth stock in the S&P 500, kicking the S&P 500 investing strategy up a notch. It has only 139 components today, which is much less diversified than the broader index, but it's still a lot of exposure to a large number of high-growth stocks instead of investing in a small group of individual stocks.
Its highest concentration is in the largest stocks on the market, including Nvidia, Microsoft, and Alphabet, which together account for about a third of the total portfolio allocation. However, it also has small positions in high-growth stocks like Robinhood Markets and Sandisk.
One of the features I love about ETFs that track indexes is that stocks that no longer fit the criteria of the index are automatically traded out for new ones. A growth ETF like this one minimizes some of the risk and provides exposure to new, up-and-coming stocks before they take off.
The strategy has proven itself over time. The ETF has delivered an annualized gain of 16.7% since its inception in 2010 and 17.5% over the past 10 years. That's well above the S&P 500's long-term average annual gain of about 10%. While this level of gain going forward is not guaranteed, it does offer a clue to what is attainable. Using 17% as an annual gain estimate for this fund over the next 30 years, investing $100 monthly and compounding gains over time will yield $788,000 by 2056.
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Jennifer Saibil has positions in Vanguard Admiral Funds - Vanguard S&P 500 Growth ETF. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
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