This ETF is the easiest way to become a millionaire investor

You don’t need a complicated investment strategy to become a millionaire.

Many investors dream of one day having a million-dollar stock portfolio. This is an important step that will place you among the wealthiest Americans and give you the peace of mind that you can enjoy your retirement with your savings.

There are many ways to achieve a million-dollar investment portfolio. If you find the next one Nvidia, it might only take a one-time investment of $5,000 and 10 years of patience to grow your portfolio to $1 million. Indeed, Nvidia and other companies have helped make many millionaires through small investors throughout history.

But picking a stock that can deliver that kind of return is like pulling a needle out of a haystack. Worse yet, you might just prick your finger and start bleeding trying to pick a big winner.

The easiest and most reliable way to become a millionaire is to buy the entire haystack.

Image source: Getty Images.

Investing systematically in a single ETF is the easiest way to become a millionaire

If Warren Buffett could only make one investment, he said it would be a S&P500 index fund. He particularly favors Vanguard funds, and his company, Berkshire Hathawayowns the Vanguard S&P 500 ETF (VOO 0.14%).

Systematically investing your money in the Vanguard S&P 500 ETF is as surefire a path to a million-dollar investment portfolio as any I know of. Buffett would agree.

There’s nothing magical about an S&P 500 index fund. It’s not sexy, and it won’t make you a millionaire overnight like Nvidia or something. Growth Stocks Powered by Artificial Intelligence (AI). But investing in an S&P 500 index fund still offers an attractive long-term return, as well as diversification, in a single investment.

Even if you suspect a little-known company could be the next Nvidia, a big bet on that company comes with a lot of risk. You can also try making your own diversified portfolio of individual stocks and other assets that could eventually reach $1 million. Maybe you’ll find some big winners there. But this requires time and effort spent searching for inventory and updating it. For the many investors who value simplicity, an S&P 500 index fund can be a one-step solution for your portfolio.

Building a Million Dollar Portfolio with a Single ETF

Investing in an S&P 500 index fund like the Vanguard S&P 500 ETF will produce returns close to those of the S&P 500. Using history as a guide, we can make good assumptions about what you can expect from an investment over the long term. term.

Historically, the S&P 500 Index has produced a compound annual total return of approximately 9.8%. Based on this figure, you can determine approximately how much you need to invest each month to build a million-dollar portfolio.

Years to $1 million monthly investment required

Calculations by author.

As you can see, the more time you have to build your million-dollar portfolio, the less you need to contribute each month to get there. In addition, contributing over a long period will prevent you from Market Volatility. The shorter your time horizon, the more sensitive your real returns are to stock market fluctuations. Keep in mind that the numbers above are projections based on historical average returns. The market never goes up in a straight line.

Investors with a longer time horizon should consider how inflation will also have an impact on the value of their portfolio. 40 years ago, a million dollars had much greater purchasing power than it does today. It is very likely that a million dollars in 40 years will not be as sufficient as it is today. So, you may want to adjust your goal and increase your monthly contributions.

But if you only want to make one investment, an S&P 500 index fund is a simple way to grow your wealth consistently over time.

Adam Levy has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends the Berkshire Hathaway, Nvidia, and Vanguard S&P 500 ETFs. The Motley Fool has a disclosure policy.

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