Can you afford to save $400 a month and invest it in the stock market? If so, you could be on your way to growing your portfolio to at least $1 million in the future.
And the best part is, you don’t have to make risky investments or worry about picking individual stocks. With an exchange-traded fund (ETF), you can have the best of both worlds: the safety that comes with diversification and the strong returns that can come from investing in top growth stocks.
Vanguard has many top ETFs for investors to choose from, and an excellent one that investors can put money into each month is the Vanguard Growth ETF (NYSEMKT: VUG)That’s why it’s a great buy, especially if you want to build up a large balance over the years.
The fund focuses on the best growth stocks
If you’re looking to earn significant returns over the long term, growth stocks will likely play a crucial role in your investment strategy. They can deliver better returns than dividend stocks, which focus more on providing investors with recurring income than pursuing aggressive growth strategies. The Vanguard Growth ETF specifically tracks large-cap growth stocks.
There are 188 stocks in the portfolio, although the three largest stocks — Apple, MicrosoftAnd Nvidia — account for a large portion, representing 36% of the ETF’s total holdings. But outside of those three, no other stock accounts for more than 5% of the ETF’s total weighting. At nearly 60% of total holdings, the fund is heavily reliant on tech stocks and how they perform. That means there can be down years due to the volatility that comes with investing in tech, but over the long term, the stocks should help the fund deliver great returns.
How a $400 a Month Investment Can Grow to $1 Million
Just because you don’t have a lump sum to invest now doesn’t mean your return can’t eventually be $1 million. If you invest $400 every month, that’s $4,800 invested over a full year. If you do that for 20 years, you’ll have $96,000 put away. And if you can extend that streak to 30 years, you’ll have $144,000 invested.
That can be a lot of money to put aside in an ETF. But thanks to the effects of compounding, your total investment could be worth much more than that.
Consider that the Vanguard Growth ETF has grown 880% over the past 20 years, including dividends. That works out to a compound annual growth rate of about 12.1%.
To be conservative, let’s assume you average a slightly lower annual return of around 11%. If you were to invest $400 per month and average that type of return over the long term, your portfolio would grow to over $630,000 after 25 years. And if you could keep investing for 30 years, your portfolio would be worth over $1.1 million.
Disciplined investing is the key to growing your portfolio
Even without going all out and expecting a super high return, you can grow your portfolio to $1 million. The key is to be able to save and invest each month, and to keep that money invested for the long term. It’s not easy to keep up, but there’s definitely a big motivating reason to do it — it could help you grow your portfolio to over $1 million.
The Vanguard Growth ETF is one ETF you can consider, but there are many other solid funds you can invest in.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard Index Funds – Vanguard Growth ETF. The Motley Fool recommends the following options: long Jan 2026 $395 calls on Microsoft and short Jan 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
1 Unstoppable Vanguard ETF That Can Turn $400 a Month Into $1 Million was originally published by The Motley Fool
