Key Points
The right investments can be life-changing. Even if you’re not a stock market expert, exchange-traded funds (ETFs) can help you build wealth that will last a lifetime with next to no effort on your end.
Growth ETFs, in particular, are designed to beat the market over time. Each fund contains stocks with the potential for above-average returns, potentially helping you earn hundreds of thousands of dollars more than if you were to invest in a broad-market fund like an S&P 500 (SNPINDEX: ^GSPC) ETF.
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Investing in the right places is critical, though, and there are two Vanguard ETFs that could set you up for life while barely lifting a finger.
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1. Vanguard Mega Cap Growth ETF
The Vanguard Mega Cap Growth ETF (NYSEMKT: MGK) contains 69 megacap stocks — which are generally defined as stocks from companies with a market capitalization of at least $200 billion. For context, large-cap stocks have a market cap of at least $10 billion.
Among the stocks within this ETF, the median market cap is a staggering $2.3 trillion. These companies are among the largest in the world, and by owning even one share of this fund, you’ll instantly own a stake in every one of these stocks.
Megacap stocks have been seriously outperforming the market in recent years, and this ETF has reaped those rewards. Over the last 10 years, the Vanguard Mega Cap Growth ETF has earned an average rate of return of just under 18% per year.
While there are no guarantees that it will continue to earn these types of returns, it can still be helpful to see roughly how much you might be able to accumulate with consistent investing.
Say you have $100 per month to invest. Let’s also assume that this ETF continues to earn an 18% average annual return, and we can compare that to the market’s historic average of 10% per year. In both cases, here’s approximately what you could accumulate over time.
| Number of Years | Total Portfolio Value: 18% Avg. Annual Return | Total Portfolio Value: 10% Avg. Annual Return |
|---|---|---|
| 15 | $73,000 | $38,000 |
| 20 | $176,000 | $69,000 |
| 25 | $411,000 | $118,000 |
| 30 | $949,000 | $197,000 |
Data source: Author’s calculations via investor.gov.
Again, nobody can say whether this ETF will continue earning returns in line with its 10-year average. But even if it falls short of that, you could still potentially accumulate hundreds of thousands of dollars with consistent monthly contributions.
2. Vanguard Information Technology ETF
The Vanguard Information Technology ETF (NYSEMKT: VGT) is a tech-focused fund that includes 317 stocks from all corners of the technology industry.
Investing in an industry-specific ETF can be a great way to gain exposure to a particular sector of the market without having to research individual stocks. When you’re investing in hundreds of stocks at a time, that can also…
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