Hitting the million-dollar mark has long been a sign of financial achievement, even though today’s $1 million doesn’t stretch as far as it did in the past.
Reaching the mark only by saving is a tough ask; it would take 25 years if you save $40,000 annually and 40 years if you save $25,000 annually. However, if you invest your money, you can reach the seven-figure mark with much less personal contribution.
Based on its historical performance, the Vanguard Morningstar Growth ETF (VUG +0.11%) could get you there with as little as $750 invested monthly. Let’s take a look at how.
Image source: Getty Images.
The math behind reaching $1 million
VUG has routinely outperformed the market, doing so in 13 of the past 20 years. Below are its average annual returns over different numbers of years:
| 3-Year Annual Average Returns | 5-Year Annual Average Returns | 10-Year Annual Average Returns | Annual Average Returns Since Inception |
|---|---|---|---|
| 25.1% | 12.9% | 17.3% | 11.2% |
Data source: YCharts. Inception date is Jan. 26, 2004.
For the sake of illustration, we’ll assume VUG continues to average 11% annual returns long-term. With those returns, you could reach the million-dollar mark in 25 years by investing $750 monthly.
If you have more time on your side, you could hit the mark in 30 years by investing $425 monthly; if you can invest more money, you can hit the mark in 23 years by investing $1,000 monthly.
Vanguard Morningstar Growth ETF
Today’s Change
(0.11%) $0.10
Current Price
$91.12
Key Data Points
AUM
$385B
Dividend Yield
1.73%
Expense Ratio
0.03%
Top Holdings
NVDA
13.63%
AAPL
12.49%
MSFT
10.13%
What makes VUG a good investment?
VUG focuses on large-cap growth stocks, which are companies expected to grow revenue and earnings faster than the overall market and most industry peers. It holds 147 stocks, 69.8% of which are tech stocks. The next two most represented sectors are consumer discretionary (13.7%) and industrials (7.3%).
Nine of VUG’s top 10 holdings are large tech companies, so as they go, so does VUG. This has worked in VUG’s favor amid the current AI boom, which has driven big-tech valuations to historic highs.
The concentration in these stocks can also cause VUG to underperform or pull back if they hit a slump (like during the 2022 bear market), but their long-term trajectory is as strong as you’ll find on the market. Current AI hype aside, the companies leading the way for VUG control much of the digital infrastructure that we use and rely on daily.
Nothing is guaranteed in the stock market, but I expect VUG to keep producing returns strong enough to help a consistent investor reach the million-dollar threshold over time. The key is consistency and patience.
