Buying long-term investments is key to building wealth over time, and growth ETFs are a smart option for many investors. They contain stocks that have the potential for faster-than-average growth, which means they generally earn higher-than-average returns.
Not all growth ETFs are created equal, though, and some are stronger than others. These three funds are all solid long-term options, and you’re going to want to keep them in your portfolio for decades.
Invesco QQQ (NASDAQ: QQQ) tracks the Nasdaq-100 index, which includes 100 of the largest nonfinancial stocks on the Nasdaq itself. This particular stock market index is focused primarily on tech stocks, which are known for their rapid growth.
This ETF was established in 1999, so it has a relatively long track record. It also contains a long list of powerhouse stocks. Some of its largest holdings are Apple, Microsoft, Amazon, Tesla, and Facebook.
Since its inception, this fund has earned an average rate of return of around 9% per year. Say you were investing $200 per month in this ETF and earning a 9% annual return. Here’s approximately how much you’d have saved over time:
- After 10 years: $36,000
- After 20 years: $123,000
- After 30 years: $327,000
Vanguard Growth ETF
The Vanguard Growth ETF (NYSEMKT: VUG) tracks the CRSP U.S. Large-Cap Growth Index, and it contains 276 large-cap stocks with potential for rapid growth. A few of its largest holdings include Apple, Microsoft, Amazon, and Google’s parent company Alphabet.
This fund was established in 2004, so it has a relatively long history. It also has a low expense ratio of just 0.04%, which means that you’ll pay $4 in annual fees for every $10,000 you invest.
This ETF has earned an average return of around 11% per year since its inception. If you were to invest $200 per month while earning an 11% annual rate of return, here’s roughly how much you’d have saved over time:
- After 10 years: $40,000
- After 20 years: $154,000
- After 30 years: $478,000
Schwab U.S. Large-Cap Growth ETF
The Schwab U.S. Large-Cap Growth ETF (NYSEMKT: SCHG) tracks the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. It contains 235 stocks from some of the largest companies in the U.S., including Apple, Microsoft, Amazon, and Facebook.
Like the Vanguard fund, this ETF has a low expense ratio of 0.04%. But it doesn’t have quite as long of a track record, as it was established in 2009.
Since its inception, though, it has experienced an average annual return of around 17% per year. Again, let’s say you’re investing $200 per month in this fund. If you continue earning returns of 17% per year, here’s how much you’d accumulate over time:
- After 10 years: $54,000
- After 20 years: $312,000
- After 30 years: $1,554,000
There are never any guarantees when investing, so you may or may not earn these types of returns over the long run. But by investing consistently and holding these ETFs for as long as you’re able, you can potentially get rich in the stock market.
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