1 Unstoppable Vanguard ETF That Could Turn $400 a Month into $1 Million

Can you afford to save and invest $400 a month in the stock market? If so, then you could be on your way to growing your portfolio to at least $1 million in the future.

And the good thing is that you don’t have to take on risky investments or worry about picking individual stocks. Through an exchange-traded fund (ETF), you can have the best of both worlds — the safety that comes with diversification and the strong returns that can come from investing in growth stocks.

Vanguard has many top ETFs that investors can choose from, and a great one that investors can put money into each month is Vanguard Growth ETF (VUG -0.30%). Here’s why it’s a great buy, especially if you want to build a large balance over the years.

The fund targets the highest growth stocks

If you want to make a significant long-term return, growth stocks will likely play a crucial role in your investment strategy. They can offer better returns than dividend stocks, which focus more on providing recurring income to investors rather than pursuing aggressive growth strategies. The Vanguard Growth ETF specifically tracks large-cap growth stocks.

There are 188 stocks in the portfolio, although the top three stocks — Apple, Microsoftand Nvidia — accounts for a large share and accounts for 36% of the ETF’s total holdings. But apart from those three, no other stock makes up 5% of the ETF’s total weight. At nearly 60% of its total holdings, the fund is heavily dependent on technology stocks and how they perform. That means there could be some bad years due to the volatility that comes with tech investing, but over the long term, the stock should help the fund deliver some great returns.

How you could invest $400 a month to $1 million

Not having a lump sum to invest right now doesn’t mean your return can’t eventually reach $1 million. If you invest $400 each month, that’s $4,800 you’ll have invested over the course of an entire year. If you do that for 20 years, you’ve put away $96,000. And if you can extend that streak to 30 years, then you’ll have $144,000 invested.

That can be a lot of money to put away in an ETF. But due to compounding effects, your total investment can be worth much more than that.

Consider that the Vanguard Growth ETF is up 880% over the past 20 years, including its dividend. This represents a compound annual growth rate of approximately 12.1%.

However, for the sake of being conservative, let’s assume a slightly slower annual return of around 11% on average. If you were to invest $400 per month and average that kind of return over the long term, your portfolio would grow to over $630,000 after 25 years. And if you can keep investing for 30 years, your portfolio would be worth more than $1.1 million.

Disciplined investing is the key to growing your portfolio

Even without swinging for the fences and assuming an extremely high rate of return, you can take your portfolio to the $1 million mark. The key is to be able to save and invest each month and keep that money invested for the long term. It’s not easy to maintain, but there’s definitely a great motivating reason to do it — it can help you grow your portfolio to more than $1 million.

The Vanguard Growth ETF is just one ETF you can consider, but there are many other solid funds you can choose to invest in.