Building long-term wealth is a goal that many aspire to achieve. While it may not be an easy task, investing in the stock market offers a simple pathway. With the right investment, one can build a portfolio that holds significant value over time. If you're seeking a low-effort means to potentially amass a substantial amount of money, investing in exchange-traded funds (ETFs) emerges as a smart choice. An ETF enables you to acquire dozens or even hundreds of stocks simultaneously within a single investment.
Discovering the Right ETF for Wealth Building
There exist numerous ETFs from which to select, covering various sectors of the market. Although there isn't a definitive "right" or "wrong" place to invest, a particular Vanguard ETF holds the potential to double your money over time with minimal effort on your part.The Vanguard S&P 500 Growth ETF - A Hybrid Approach
The Vanguard S&P 500 Growth ETF (VOOG 1.64%) serves as a hybrid between an S&P 500 ETF and a growth ETF. It encompasses only the growth companies within the S&P 500 index (^GSPC 0.82%). The S&P 500 stands as one of the fundamental pillars of the stock market, comprising stocks from the 500 largest publicly traded companies in the US. These stocks are renowned for their strength and health, making them more resilient during periods of market turbulence.Since this ETF only includes growth stocks within the index, it has the capacity to generate above-average returns while still maintaining a relatively safe and stable investment profile compared to other growth ETFs.As shown in the data by YCharts, despite its focus on growth stocks, the ETF remains relatively diversified. It includes 234 stocks from 11 different industries, with nearly half of the fund allocated to stocks in the tech sector. Greater diversification helps to limit risk, especially in times of market downturns.Consistent Investing for Wealth Accumulation
Just like with any investment, the key to building wealth lies in consistent investing and maintaining a long-term perspective. No one can accurately predict how the market will perform in the coming weeks or months. However, if you remain invested for several years or even decades, you are more likely to witness significant gains.Over the past 10 years, the Vanguard S&P 500 Growth ETF has achieved an average rate of return of 14.95% per year. At this rate, your money can double in approximately five years, assuming you simply let your money grow without making additional contributions.To enhance your earnings further, you can consider making monthly investments. For instance, if you were to invest $200 per month while earning a 14% average annual return, here's an approximation of how much you could accumulate over time:After 10 years, your total portfolio value would reach $46,000.After 15 years, it would amount to $105,000.After 20 years, it would be $218,000.After 25 years, it would grow to $436,000.After 30 years, it would reach $856,000.After 35 years, it could exceed $1,665,000.Data source: Author’s calculations via investor.gov.Again, it's impossible to predict the short-term performance of the stock market or this specific ETF. But by staying invested for at least a decade, you have the opportunity to multiply your money multiple times over. Over a lifetime, you could potentially earn well over $1 million in total.All ETFs possess unique advantages and disadvantages, but they can serve as an excellent means to build long-term wealth with minimal effort. The Vanguard S&P 500 Growth ETF, in particular, can assist you in earning above-average returns over time, boosting your savings without having to exert much effort.Katie Brockman holds no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool adheres to a disclosure policy.READ MORE