There are many possible ways to become a millionaire. One of the best solutions is to simply invest in stocks – for the long term.

However, you don’t want to pick just any stock or buy a stock when it’s overvalued. This can leave many of us wondering what we should do.

Enter the Vanguard S&P 500 ETF (VOO -0.04%) — a simple S&P500 index fund that can make you a millionaire.

Image source: Getty Images.

Here’s some information on what this ETF is and what it could do for you.

Discover the Vanguard S&P 500 ETF

First, the Vanguard S&P 500 ETF is a exchange-traded fund (ETF) — a fund that trades like a stock. It is also an index fundaiming to offer the same performance (minus its minimal costs) as the S&P 500 index of the 500 largest American companies. It is “spending rate“, or annual fee, is just 0.03%, costing you $3 per year for every $10,000 you have in the fund.

How has this ETF performed in the past? Review the chart below, but remember that past results are no guarantee of future results. (Plus, any low-fee S&P 500 index fund, like those from Fidelity, Schwab, or other good financial companies, will achieve similar results.)

Source: Morningstar.com, as of October 21, 2024. Chart by author.
*Since the Vanguard ETF has not been around for 15 years (its inception date was September 7, 2010), this figure comes from SPDR S&P 500 ETF (NYSEMKT: SPY).

What’s in the Vanguard S&P 500 ETF?

Here are the top holdings in the Vanguard S&P 500 ETF, as of the end of September – and they’ll be the same for roughly any other S&P 500 index fundAlso:

Source: Vanguard.com. As of September 30, 2024. Chart by author.

If you are an admirer of the “Magnificent Seven” stocks, due to their impressive performance over many years, you may be happy to know that all seven – Apple, Microsoft, Alphabet, parent company of Google, Amazon.com, Nvidia, Meta Platforms, parent company of Facebook , and Tesla – are part of the Vanguard S&P. 500 ETFs. If you buy shares of the index fund, you will have positions in all seven companies, as well as 493 other major companies.

How Can the Vanguard S&P 500 ETF Get You to $1 Million?

How, exactly, could the Vanguard S&P 500 ETF grow your wealth to $1 million (or more)? Let’s look at some numbers. And despite those delicious average annual returns shown in the table above, which range from about 11% to 16%, let’s be more conservative.

The S&P 500 averaged annual returns closer to 10% (ignoring inflation) over long periods. During your particular investment period, the average may be higher or lower. So let’s go with 8%. Here’s how your money can grow over time at this rate:

Source: Author’s calculations and graph.

As the chart shows, you could hit seven figures within 20 to 30 years, depending on how much you spend and whether you do it every year. You could become a millionaire even faster if you can save and invest even larger amounts.

If you want to aim for even faster growth…

If you don’t want to focus all your long-term dollars solely on the S&P 500, there are plenty of other exciting and successful ETFs to consider. Take a look at one of the following, for example, and maybe put part of your portfolio in one or more of them. Just be aware that when funds are more focused on fast-growing, high-tech companies, they can be more volatile.

• Vanguard Information Technology ETF (VGT)
• Vanguard Growth ETF (VUG)
• SPDR S&P 500 Portfolio Growth ETF (ESPIONAGE)
• VanEck Semiconductor ETF (SMH)

No matter how you invest your money for the long term, make sure you do it to build a nest egg for retirement. A simple S&P 500 index fund maybe that’s all you need to do it.