A Promising Vanguard ETF to Grow Your Investment

Investing a significant amount of money in the stock market can be daunting. While your goal is to earn a strong return to maximize that investment, it’s essential to avoid high-risk options that could lead to substantial losses. Unlike risking $100, a $50,000 investment calls for careful consideration.

For many investors, particularly those who prefer not to monitor stocks constantly, an exchange-traded fund (ETF) can be an excellent choice. Vanguard offers numerous ETFs with low fees that are suitable for long-term investment, allowing you to minimize risk while still positioning yourself to achieve solid returns.

One ETF that stands out for growth investors today is the Vanguard Growth Index Fund ETF (VUG). This fund presents a compelling opportunity if you wish to turn a $50,000 investment into over $1 million.

Low Fees and Strong Growth Potential

When investing for the long term, it’s vital to select funds with low fees. High fees can significantly hinder your returns, so keeping them to a minimum allows your investment to grow more rapidly.

In the case of the Vanguard Growth ETF, the fee is just 0.04%, which is incredibly low and won’t considerably impact your returns. This modest expense ratio accompanies a well-diversified portfolio containing over 180 holdings. Investors gain access to some of the leading growth stocks worldwide, such as Apple, Nvidia, and Microsoft. However, be mindful that tech stocks dominate the fund, representing about 57% of its total weight. There’s also a notable allocation toward consumer discretionary stocks (20%), industrials (9%), and healthcare (6%).

Projecting Growth Over Time

The S&P 500 generally boasts an annual return of around 10%. Recently, it has performed well, with 2024 projected to be the second consecutive year with gains exceeding 20%. Factors like technology stock performance and excitement around artificial intelligence have driven this growth.

While high returns in recent years are promising, they suggest a potential slowdown may be on the way. Instead of attempting to predict returns, consider the table below detailing how a $50,000 investment might grow at various annual growth rates:

	$50,000 Investment
	Annual Growth Rate
Years	8%	9%	10%	11%
15	$158,608	$182,124	$208,862	$239,229
20	$233,048	$280,221	$336,375	$403,116
25	$342,424	$431,154	$541,735	$679,273
30	$503,133	$663,384	$872,470	$1,144,615
35	$739,267	$1,020,698	$1,405,122	$1,928,743

Source: Author's calculations.

If large-cap growth stocks do well in the long run, this fund could potentially grow a $50,000 investment to $1 million in about 30 years. However, if the market faces a prolonged slowdown, it may take as long as 35 years. While this timeframe might seem lengthy, the Vanguard Growth ETF offers a stable, relatively safe investment to hold over the years.

The Case for Targeting Growth Stocks

There is no way to guarantee future returns, but investing in growth stocks is generally a more effective strategy to enhance your portfolio's value compared to safer options that may yield lower returns. Although riskier investments can offer opportunities for higher returns, they also hold the potential for substantial losses if circumstances turn unfavorable.

Growth stocks often attract attention and excitement, positioning investors for the best possible long-term returns. With the Vanguard Growth fund, you do not need to worry about identifying the top growth stocks yourself; the ETF is an excellent addition to any investment portfolio, regardless of the amount you are putting in.

investment, ETF, growth