As the stock market continues to rise, now can be a fantastic time to invest. The current bull market is still strong, and the S&P500(SNPINDEX: ^GSPC) is up almost 26% so far this year.
If you’re looking for an easier way to boost your savings, investing in an exchange-traded fund (ETF) can be a smart choice. An ETF is a collection of stocks bundled into one investment, providing exposure to hundreds of companies with very little effort.
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The right ETF for you depends on several factors, such as your risk tolerance and overall investment goals. For those looking for a high-performance growth ETF that can potentially turn a few hundred dollars a month into $1 million or more, this investment can get you there while you barely lift a finger.
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A growth ETF is a fund that only holds stocks with the potential for faster-than-average growth over time. Some are more niche, such as sector-specific ETFs or funds that only include large-cap stocks, while others offer more variety and diversification.
If you are looking for a slightly safer option, the Vanguard Growth ETF(NYSEMKT: VUG) could be a good fit for your portfolio. This ETF contains 183 stocks from 12 sectors, although it is heavily weighted towards the technology sector – with technology stocks making up almost 58% of the fund.
One advantage of this particular ETF is that it aims to strike a balance between risk and reward. All stocks in the fund are large-cap stocks, and the average market capitalization is a whopping $1.4 trillion. The top 10 holdings in this ETF make up over 57% of the entire ETF, and this list includes industry titans like Apple, MicrosoftAnd Nvidia.
The rest of the fund consists of the remaining 173 shares. Investing in more stocks can not only help diversify your portfolio, but it can also increase your chances of buying a winner. If one of these smaller stocks becomes a powerhouse, it could more than make up for the underperforming stocks in the fund.
This balance between risk and reward can help you maximize your income while better protecting your savings. Giant companies like Apple and Microsoft are likely to survive the market turbulence, while smaller stocks have the potential for explosive growth.
First, it’s important to say up front that growth ETFs generally carry higher risk than many other types of funds. While this particular ETF mitigates some of that risk, it will still be more volatile than, say, an S&P 500 ETF or an overall stock market ETF.
Before you consider investing, ask yourself if you are comfortable with that level of volatility. Growth ETFs often deliver explosive returns when the market is booming, but can also be hit much harder during a recession. If you’re uncomfortable with the idea of facing more serious ups and downs, growth ETFs can be a stressful investment.
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That said, this type of investment can also help you earn much higher-than-average returns over time. The Vanguard Growth ETF has returned an average of 15.17% per year over the past ten years. By comparison, the Vanguard S&P 500 ETF has returned an average of just 12.96% per year in that time, while the stock market as a whole has returned an average of 10% per year over the past few decades.
Because growth ETFs can be more unpredictable, there are no guarantees that you will continue to earn an average annual return of 15%. But even a slightly higher than average return can still make you a lot of money.
If you were to invest $400 per month, this is approximately the amount you could accumulate depending on whether you earn an average annual return of 11%, 13% or 15%:
Number of years
Total Portfolio Value: 11% Avg. Annual return
Total portfolio value: 13% Avg. Annual return
Total Portfolio Value: 15% Avg. Annual return
20
$308,000
$389,000
$492,000
25
$549,000
$747,000
$1,021,000
30
$955,000
$1,407,000
$2,087,000
Data source: Author’s calculations via investor.gov. Table by author.
The most important thing to keep in mind when investing is that a long-term outlook is key, and that’s especially critical with growth ETFs. We will face a downturn sooner or later, and even the most seasoned investors are often shocked by the volatility. But by holding onto your investment for decades, you can weather the storm and reap long-term gains.
There is no one best way to invest, and everyone’s approach will be different. But if you’re looking for a lower-effort investment that can earn you a lot of money over time, the Vanguard Growth ETF could be a good option.
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Katie Brockman holds positions in Vanguard Index Funds – Vanguard Growth ETF and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, Vanguard Index Funds – Vanguard Growth ETF and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
1 Beautiful Growth ETF That Could Turn $400 a Month Into $1.4 Million While Barely Lifting a Finger was originally published by The Motley Fool
