Is Vanguard Growth Index Fund ETF the Key to Turning $50,000 into $1 Million?
Investing large sums in the stock market can be daunting. You want good returns, but minimizing risk is crucial. A $100 investment carries little weight if lost, but tens of thousands require careful selection of investments.
For many investors, especially those who prefer not to watch stock prices daily or read endless financial news, an exchange-traded fund (ETF) might be the way to go. Vanguard provides numerous reputable ETFs with low fees, making them attractive long-term investments that can yield high returns with lower risk.
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Vanguard Growth Index Fund: A Low-Cost Option for Growth Investors
When planning for the long term, it’s important to avoid funds with high fees. These costs can diminish your returns significantly, but keeping fees low helps your investment grow faster.
While some fees are inevitable, the Vanguard Growth ETF’s expense ratio is only 0.04%. This low figure won’t greatly affect your overall returns.
Diversification is another strong point of this fund, boasting over 180 holdings. Investors gain access to top growth stocks like Apple, Nvidia, and Microsoft. However, it’s important to note that about 57% of the fund is invested in technology stocks, which presents a risk if that sector underperforms. Still, the fund also includes 20% consumer discretionary stocks and smaller portions in industrials (9%) and healthcare (6%).
VUG Total Return Level data by YCharts
Projecting Potential Growth: Turning $50,000 into $1 Million
The historical annual return of the S&P 500 is approximately 10%. Recently, it has outperformed that average, with the 2024 market indicating gains exceeding 20% for the second consecutive year. This surge can be attributed to strong technology stock performance and the buzz surrounding artificial intelligence.
While these trends are promising for investors, they might indicate a slowdown in the future. To illustrate the growth potential, here’s a table showing how a $50,000 investment can develop under 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 |
Data source: Calculations by author.
If large-cap growth stocks flourish, a $50,000 investment could grow to $1 million within approximately 30 years. However, economic downturns may prolong this period to about 35 years.
While this timeframe appears lengthy, holding a fund like this is generally seen as a safer investment strategy for the long term.
Why Growth Stocks Remain the Best Long-Term Investment
Although future returns cannot be predicted with certainty, history suggests that investing in growth stocks typically provides better long-term returns than dividend stocks or safer investments with lower yields. While higher risks may promise greater rewards, they can just as easily result in losses.
Growth stocks attract investor interest, often leading to substantial long-term gains. Investing in the Vanguard Growth fund removes the burden of stock selection, allowing for sound decisions regardless of investment size.
Should You Consider Investing $1,000 in Vanguard Growth ETF Today?
Before making any investments in Vanguard Growth ETF, consider this:
The Motley Fool Stock Advisor team has identified its top 10 stock picks for investors right now, and Vanguard Growth ETF is not on the list. These selections could yield substantial returns in the years ahead.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard Index Funds – Vanguard Growth ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein may not reflect those of Nasdaq, Inc.
