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Want to grow your portfolio to $1 million? If you're able to put aside $350 per month on a regular basis, I can show you how that goal can be attainable over the long run without having to put your money into risky investments. Especially when investing for the long term, it's important to try to find a good balance between safety and growth.
There is no shortage of potentially alluring investment strategies out there, some of which may involve the latest investing themes or crypto stocks, but they often carry significant risks. You might generate some fantastic returns in the short run, but you could also incur hefty losses.
Below, I'll show you a practical and easy investment strategy you can deploy to put you on track to build up a portfolio worth $1 million.
Aim for above-average returns by focusing on top growth stocks
The S&P 500 is a collection of the top stocks on the market. These are established businesses that have good financials and often possess attractive growth opportunities. The index gives investors a solid mix of stocks, covering a broad range of sectors. Historically, it has averaged an annual return of around 10%.
A concern for many investors, however, is that with the index coming off a second consecutive year of returns in excess of 20%, it could be due to underperform in the future. Investors could be disappointed if they expect even 10% gains over the long run. A more realistic scenario might be to project lower returns.
One way to increase your odds of generating a better return is by targeting growth stocks. One good exchange-traded fund (ETF) that gives you exposure to the top growth stocks on the S&P 500 is the Vanguard S&P 500 Growth Index Fund ETF (NYSEMKT: VOOG). It holds around 230 stocks and won't be as diverse, but that can work in your favor because targeting growth stocks can lead to better returns. Over the past decade, the fund has easily outperformed the S&P 500.
How much a monthly investment could grow over the years
The Vanguard S&P 500 Growth Index can be an ideal fund to invest in every month because it has a low expense ratio of 0.10% while also giving you exposure to many top stocks. This is why it can be an easy investment option and a good place to invest $350 into each and every month. And by doing so, the payoff can be significant.
The table below shows how a $350 investment might grow, assuming the fund averages a return of around 9% per year, which factors in a bit of a slowdown in the market. However, by focusing on growth investments, it may still allow investors to generate strong returns in the long run.