Want to grow your portfolio to a million dollars? If you can regularly put aside $350 a month, I can show you how to achieve that goal in the long term without having to put your money into risky investments. Especially when investing for the long term, it is important to try to find a good balance between safety and growth.
There is no shortage of potentially enticing investment strategies, some of which may include the latest investment topics or crypto stocks, but they often carry significant risks. You could make fantastic returns in the short term, but you could also suffer huge losses.
Below, I’ll show you a practical and simple investment strategy you can implement to get you on track to building a million dollar portfolio.
The S&P 500 is a collection of the best stocks on the market. These are established companies that have good finances and often attractive opportunities for growth. The index gives investors a solid mix of stocks, covering a wide range of sectors. Historically, has an average annual return of about 10%.
However, the concern for many investors is that the index would see returns in excess of 20% for the second year in a row, which could be due to underperformance in the future. Investors may be disappointed if they expect even 10% returns over the long term. A more realistic scenario could be to predict lower returns.
One way to increase the odds of generating a better return is targeting stock growth. One good exchange-traded fund (ETF) that gives you exposure to the biggest growth stocks in the S&P 500 is Vanguard S&P 500 Growth Index Fund ETF (NYSEMKT: VOOG). It contains around 230 stocks and won’t be as diversified, but this can work in your favor as targeting growth stocks can lead to better returns. Over the past decade, the fund has easily outperformed the S&P 500.
The Vanguard S&P 500 Growth Index can be an ideal fund to invest in every month because it has a low expense ratio of 0.10% while giving you exposure to many top stocks. Because of this, it can be an easy investment option and a good place to invest $350 every month. And in this way, the profit can be significant.
The table below shows how a $350 investment could grow, assuming the fund has an average return of about 9% per year, which factors in a slight market slowdown. However, by focusing on growth investments, it can still allow investors to generate strong returns over the long term.
