In This Article:
Key Points
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Stocks rise in value over the long term, and investing in the market can be an effective way to grow your savings.
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The Vanguard Growth Index Fund ETF is full of top growth stocks and has outperformed the S&P 500 in recent years.
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Depending on your average annual return, your long-term gains can vary significantly.
Investing a large lump sum today into a diversified exchange-traded fund (ETF) and simply holding on to it can be a great way to grow your portfolio over the long term. Historically, stocks have risen in value, and the S&P 500 has averaged an annual return of around 10% per year.
But can investing $50,000 today into a top fund like the Vanguard Growth Index Fund ETF (NYSEMKT: VUG) be enough to grow your portfolio to $1 million by the time you retire? Let's take a look at how probable that is.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
A top-performing ETF that's focused on growth
ETFs can provide you with lots of diversification, and while there are many types you can hold, I'm going to focus on one in particular, which may be ideal for long-term investors: the Vanguard Growth Index Fund ETF.
This ETF provides exposure to the top growth stocks in the country. There were 166 stocks in the fund as of the end of March, including Apple, Meta Platforms, Tesla, and many other big names.
For long-term investors, this is a good example of the type of ETF you may want to hang on to for the long haul, since it will likely rise in value and has a good chance of outperforming the market given its focus on growth stocks.
While the ETF has outperformed the S&P 500 in recent years, it's not guaranteed to continue to do so. But it's nonetheless a good ETF to hang on to in your portfolio if you're planning to remain invested for not only years but also decades. Growth stocks can be volatile from one year to the next, but over the long haul, they can produce significant returns for investors.
Here's how much a $50,000 investment might grow over the years
If you invest in the Vanguard Growth Index Fund, you may be able to outperform the market's long-run gains. But for the sake of being conservative, in the table below, I've shown how a $50,000 investment might grow if you underperform the market, match its long-run average, and if you slightly beat it.
| Future Portfolio Balance Investing $50,000 Today at Various Growth Rates | |||
|---|---|---|---|
| Years | 9% | 10% | 11% |
| 5 | $76,931 | $80,526 | $84,253 |
| 10 | $118,368 | $129,687 | $141,971 |
| 15 | $182,124 | $208,862 | $239,229 |
| 20 | $280,221 | $336,375 | $403,116 |
| 25 | $431,154 | $541,735 | $679,273 |
| 30 | $663,384 | $872,470 | $1,144,615 |
| 35 | $1,020,698 | $1,405,122 | $1,928,743 |
Calculations and table by author.