Investing in exchange traded funds (ETFs) is one of the simplest and clearest ways to buy into the stock market. By owning just one share of an ETF, you can gain exposure to dozens or hundreds of stocks at once.
While some ETFs aim to track major indexes such as the S&P500(SNPINDEX: ^GSPC)others are more niche. For example, growth ETFs are designed to beat the market and deliver above-average returns over time.
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These investments may involve more risk than broad-market funds, but they can also give your savings a boost. This single-growth ETF has nearly doubled the performance of the S&P 500 over the past fifteen years, potentially turning just $200 a month into more than $1 million. Here’s how.
If you’re looking for a growth ETF with a proven track record, the Schwab US large-cap growth ETF(NYSEMKT: SCHG) could be a smart option. This fund includes 231 stocks (nearly half of which are from the technology sector), with a weighted average market capitalization of approximately $1.4 billion.
The five largest positions in this ETF are Nvidia, Apple, Microsoft, AmazonAnd Metaplatformsrespectively, and those stocks alone make up almost 40% of the entire fund. The rest of the ETF therefore consists of dozens of smaller shares.
While all investments in this fund are large-cap stocks (meaning they have a market capitalization of at least $10 billion), the inclusion of “mega-cap” stocks (generally defined as stocks with a market capitalization of at least $200 billion) may include: can help reduce some of the risk. These industry titans may not have as much room for explosive growth as emerging companies, but they are more likely to survive market volatility.
Growth ETFs are designed to outperform the market over time, and this fund is no exception. Since its inception in December 2009, it has delivered a total return of about 755%, as of this writing – nearly double the S&P 500’s return of 435% in that time.
Keep in mind that there are no guarantees that this ETF will continue to perform at this pace, and growth ETFs are generally riskier than many other types of investments. They also tend to be hit harder during recessions, so be prepared for more severe swings if the market takes a turn for the worse.
Again, there is no way to know with certainty how an investment will perform in the future, as past performance does not predict future returns. But it can still be useful to look at those past returns to get a rough idea of ​​how much you could potentially earn.
Since its launch in 2009, the Schwab US Large-Cap Growth ETF has delivered an average annual return of 16.22% per year. If you invested $200 per month at that rate, you could accumulate about $1.33 million after 30 years.
Because growth ETFs can be somewhat unpredictable, it can be helpful to look at alternative scenarios as well. If you still invest $200 per month, this is about what you could earn over time, depending on whether you earn an average return of 10% per year (which is in line with the stock market’s historical average ), 12% per year, or 14% per year.
Total Portfolio Value: 10% Avg. Annual return (market average)
Total portfolio value: 12% Avg. Annual return
Total Portfolio Value: 14% Avg. Annual return
20
$137,000
$173,000
$218,000
25
$236,000
$320,000
$436,000
30
$395,000
$579,000
$856,000
Data source: Author’s calculations via investor.gov.
Obviously, an average annual return of 16% is preferable to an average annual return of 10%. But even if this ETF fails to beat the market at all, you can still make hundreds of thousands of dollars over time. And if it can deliver just a slightly higher-than-average return, it can significantly increase your earnings.
The right ETF for you depends on your goals and risk tolerance, and a growth ETF may be a good fit for people who want to beat the market with less effort than buying individual stocks. Just make sure you keep your expectations in check and stay invested for at least a decade or two to maximize your returns while minimizing risk.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Katie Brockman has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. 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.
This ETF has nearly doubled the S&P 500 since 2009. Here’s how it can turn $200 a month into $1.3 million. was originally published by The Motley Fool