This ETF is the simplest way to become a millionaire investor

You don’t need a complicated investment strategy to become a millionaire.

Many investors dream of one day owning a $1 million stock portfolio. This is a milestone that makes you one of the wealthiest Americans and gives you peace of mind that your savings will allow you to enjoy retirement.

There are several ways to reach a $1 million investment portfolio. If you find the following nvidia, it may take just one $5,000 investment and 10 years of patience to grow your portfolio to $1 million. In fact, Nvidia and other companies have helped create many millionaires from small investors throughout history.

But picking stocks that can deliver that kind of return is like picking a needle in a haystack. What’s worse is that you might prick your finger and start bleeding trying to pick out the big winner.

A simpler and more reliable way to become a millionaire is to buy a whole hay bale.

A woman spreads a $100 bill in front of her face.

Image source: Getty Images.

Investing consistently in a single ETF is the easiest way to become a millionaire

Warren Buffett said that if he could only make one investment, it would be investing. S&P 500 Index fund. He particularly favors Vanguard funds and his company. Berkshire Hathawayowns Vanguard S&P 500 ETF (flight 1.24%).

Consistently investing money in the Vanguard S&P 500 ETF is as sure a path to a million dollar investment portfolio as any I know of. Buffett would agree.

There’s nothing magical about an S&P 500 index fund. It’s not sexy, and it won’t make you a millionaire overnight like Nvidia or other artificial intelligence (AI)-led growth stocks. However, investing in an S&P 500 index fund still offers attractive long-term returns and diversification. Single invest.

Even if you suspect that some unknown company could be the next Nvidia, betting big on that company carries a lot of risk. You can also build a diversified portfolio of individual stocks and other assets to eventually reach $1 million. Maybe you have a big winner. However, this requires time and effort spent researching stocks and keeping up to date. For many investors who value simplicity, an S&P 500 index fund can serve as a one-step solution for their portfolio.

Build a $1 million portfolio with just one ETF

Investing in an S&P 500 index fund, such as the Vanguard S&P 500 ETF, can provide returns that closely match the S&P 500. Using history as a guide, you can make some good assumptions about what you can expect from your long-term investments.

Historically, the S&P 500 has delivered a compound annual total return of approximately 9.8%. Based on these numbers, you can roughly plan how much you need to invest each month to build a $1 million portfolio.

Years up to $1 millionMonthly investment required
40 years$190
35 years$308
30 years$504
25 years$836
20 years$1,425
15 years$2,552
10 years$5,056

Calculation by author.

As you can see, the more time you invest in building a $1 million portfolio, the less you will need to contribute each month to get there. Plus, contributing over a long period of time can cushion you from market volatility. The shorter your investment horizon, the more sensitive your actual returns will be to stock market fluctuations. Please note that the above numbers are projections based on historical average returns. Markets never rise in a straight line.

Long-term investors should consider how inflation will affect the value of their portfolio. Forty years ago, $1 million had much more purchasing power than it does today. There’s a very good chance that $1 million won’t be worth as much 40 years from now as it is now. So, it might be a good idea to adjust your goals and increase your monthly donations.

But if you only want to invest once, an S&P 500 index fund is a simple way to continue growing your wealth over time.

Adam Levy has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends the Berkshire Hathaway, Nvidia, and Vanguard S&P 500 ETFs. The Motley Fool has a disclosure policy.

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