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Investing early can significantly enhance the chances of retiring a millionaire, with Vanguard offering low-cost options including the Vanguard S&P 500 ETF (NYSEMKT: VOO), Vanguard Growth ETF (NYSEMKT: VUG), and Vanguard Information Technology ETF (NYSEMKT: VGT). These ETFs have strong historical performance, with the S&P 500 ETF achieving an average annual return of 12.8% over the past decade and the Growth ETF reaching 15.3%.
To accumulate a $1 million portfolio in 20 years with the S&P 500 ETF, an initial investment of $5,000 along with $1,000 monthly contributions would be needed. In contrast, the Growth ETF could yield approximately $3 million with similar contributions, if the average annual return of 15.3% is maintained. The Information Technology ETF boasts a higher average annual return of 19.8%, but is more concentrated in top tech companies like Nvidia, Microsoft, and Apple, accounting for about 45% of its holdings.
Investors should consider dollar-cost averaging as a strategy to mitigate risk and maximize potential returns over time. Historical performance highlights the importance of starting early to take advantage of compound growth, which is crucial for building wealth.
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