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If you don't have a significant amount of savings built up right now, that doesn't mean you can't put yourself on a path to growing your portfolio to more than $1 million. You can invest while saving to help make the most of any money that you're able to put aside into stocks.
A safer option than investing in individual stocks is to hold an exchange-traded fund (ETF) in your portfolio. It can give you an easy way to diversify without having to pick individual stocks, and you don't have to worry about one individual holding having too large an effect on your overall returns. It can be an ideal investment option to help keep your overall risk low.
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One ETF that can help you diversify while giving you exposure to many top growth stocks is the Vanguard Mega Cap Growth ETF (NYSEMKT: MGK). Here's how investing $275 per month in that fund can set you up for some massive gains in the long run.
The ETF has averaged an annual return of more than 15% over the past decade
The benefit of investing in the Vanguard Mega Cap Growth ETF is that it focuses on the largest growth stocks in terms of market cap, including big names such as Apple, Microsoft, Nvidia, and many others. There are 71 stocks in total in the fund, and it won't be as diverse as many other ETFs. But by loading up on the heavy hitters, investors can achieve some sizable returns without taking on too much risk. It charges a minimal expense ratio of 0.07%.
Over the past 10 years, the fund has achieved total returns (including dividends) of approximately 324%, which is much better than if you were to just mirror the S&P 500.
The ETF has returned 15.6% per year on an annualized basis. Growth stocks, and in particular, tech stocks, have performed exceptionally well in recent years. Investors may want to temper their expectations for the future, as that high a rate may not be sustainable for the very long term. But even if the ETF averages a more conservative return of around 10%, it can still be a solid option for long-term investors.
Turning $275 a month into a portfolio worth over $1 million
If you invest money each month into a high-powered fund such as the Vanguard Mega Cap Growth ETF, you can accelerate your portfolio's gains much more than if you were to invest in some safe, slow-growing dividend stocks.
Assuming a 10% annual growth rate and a continued $275-per-month investment into the fund, here's what your portfolio's balance could look like over the years.