Investing in exchange-traded funds (ETFs) is one of the easiest ways to build wealth because this type of investing requires almost no effort on your part. Most ETFs are also well diversified, with dozens of stocks held in one fund, which helps reduce risk.
ETFs’ best performance is years of uninterrupted growth, making them a great “set it and forget it” investment. There’s also a powerful Vanguard ETF that can turn a few hundred dollars a month into $2 million or more over time.
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If you’re looking for ways to invest in America’s largest and strongest growth stocks, Vanguard Mega Cap Growth ETF (NYSE: MGK) It might be a smart buy now.
The fund holds 60 megacap stocks, generally defined as stocks with a market capitalization of at least $200 billion.
Many of these companies are industry leaders with decades of history of consistent growth despite short-term fluctuations, making this ETF a good choice if you’re worried about a recession. While all stocks can experience declines during a bear market, larger companies are generally more likely to weather the storm.
Because the Vanguard Mega Cap Growth ETF focuses on large-cap growth stocks, it’s also more likely to provide above-average returns over time.
In fact, over the past 10 years, the ETF’s total return was approximately 403%, compared with the ETF’s total return of 258%. S&P 500 Indexas of this writing. In other words, if you invested $10,000 ten years ago, you would have accumulated about $50,000 with the Mega Cap Growth ETF and $36,000 with the S&P 500 ETF.
First, it’s important to note that past performance cannot predict future returns. However, sometimes it can be helpful to look at historical returns to understand an investment’s capabilities.
Over the past 10 years, the Vanguard Mega Cap Growth ETF has averaged annual returns of 18.83%. Let’s say you invest $250 per month and get an average annual return of 18%, 15% or 12%. (For context, the market itself returns an average of about 10% per year.) Here’s a rough look at what your money would add up to in each scenario:
|
years |
Total Portfolio Value: Average 12% Annual Return |
Total Portfolio Value: Average 15% Annual Return |
Total Portfolio Value: Average 18% Annual Return |
|---|---|---|---|
|
10 |
$53,000 |
$61,000 |
$71,000 |
|
15 |
$112,000 |
$143,000 |
$183,000 |
|
20 |
$216,000 |
$307,000 |
$440,000 |
|
25 |
$400,000 |
$638,000 |
$1,028,000 |
|
30 |
$724,000 |
$1,304,000 |
$2,373,000 |
Data source: Author’s calculations via investor.gov.
