Whether you’re saving for retirement or simply trying to generate long-term wealth, investing in the stock market is a smart move. Investing can help you save significantly more than stashing your money in a savings account, and it’s easier than you may think to get started.
You don’t need to be wealthy to make money in the stock market, and even small amounts can add up over time with the right investments. By investing $1,000 in these ETFs, you could grow your savings into $100,000 or more over time.
1. iShares Core S&P Mid-Cap ETF (IJH)
The iShares Core S&P Mid-Cap ETF (NYSEMKT:IJH) includes 400 mid-cap stocks from a wide variety of industries. Mid-cap stocks can be smart investments because they often have more potential for growth than large-cap stocks, but they’re not as volatile or risky as small-cap stocks.
Because this fund includes so many stocks from different industries, it provides plenty of diversification and limits your risk. This ETF also makes a fantastic long-term investment, because mid-cap stocks can outperform both large-cap and small-cap stocks over time. The longer you hold your investments, the more you can potentially earn.
Since its inception in 2000, this ETF has earned an average rate of return of around 10% per year. At that rate, if you were to invest $1,000 right now and did not make any additional contributions, your money would grow into $100,000 within around 50 years.
Not everyone has 50 years to wait, of course, and your money will grow much faster if you continue investing regularly. For example, if you were to invest just $100 per month on top of your initial $1,000 investment, you’d have more than $350,000 saved after just 35 years, assuming you’re still earning a 10% average annual return.
2. Vanguard Growth ETF (VUG)
The Vanguard Growth ETF (NYSEMKT:VUG) includes 287 stocks from companies that are likely to experience rapid growth. This fund is heavily weighted toward the technology industry, with nearly half of the stocks from this sector.
It can be risky to invest so heavily in stocks from a single industry because your portfolio isn’t as diversified. However, tech stocks are known for their explosive growth, so you’re also more likely to see higher-than-average returns with this ETF. In addition, the largest stocks in the fund include heavyweights like Amazon, Apple, Alphabet, and Microsoft.
This fund was established in 2004, and since then it has earned an average rate of return of close to 12% per year. If you were to invest $1,000 today without making any extra contributions, it would take around 41 years to accumulate $100,000.
However, if you were to invest $1,000 today plus another $100 per month, you’d have roughly $571,000 after 35 years.
3. Schwab US Large-Cap Growth ETF (SCHG)
The Schwab US Large-Cap Growth ETF (NYSEMKT:SCHG) contains 232 large-cap growth stocks. Of the three ETFs on the list, this fund includes the fewest stocks — which does mean it’s not quite as diversified. That said, large-cap stocks tend to carry less risk because larger companies generally aren’t as volatile as smaller organizations.
This ETF also doesn’t have as long a track record as some other funds, as it was established in 2009. With any investment, past returns don’t predict future earnings. But when an investment hasn’t been around as long, it’s even more likely that its returns in previous years may not necessarily align with its future returns.
Since its inception in 2009, this fund has earned an average rate of return of around 18% per year. Again, you may not necessarily experience returns this high over several decades. But say that you invested $1,000 right now and did continue earning 18% average annual returns. You’d have $100,000 after around 28 years, assuming you made no additional contributions.
If you were to continue investing $100 per month, you’d have around $2.5 million after 35 years, all other factors remaining the same.
Investing in the stock market is one of the best things you can do to supercharge your savings. By choosing the right investments, you can earn more than you might think.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.