I am a common guy who budgeted, saved, and invested himself into becoming a millionaire. If I can do it, so can you. I will show you how. I promise it is not hard; it just takes discipline and a goal.
If you have a goal to become a millionaire, and you can be disciplined with your budget, you are halfway there. I can not teach you discipline but what I can help with is the knowledge you need about investing to get you to that millionaire status goal.
As many of you may know, my investing style is pretty simple. I mostly invest in index funds and ETFs. Simple, right?! I KNOW. Guess what investing does not have to be? Complicated. Below I will explain ten ETFs out of the close to 3,000 funds there are to choose from that can get you on the path to become a millionaire. I will pause here to note that this information does not take into consideration 2022, this is not investment advice and that you do not need to include ALL of these funds within your portfolio, but instead should craft a mix of some of these that align with your risk profile and goals.
- Total US Stock Market which is designated as $VTI. This fund has strong holdings including Apple, Microsoft, Amazon, Facebook, Google Class A and B, Tesla, Berkshire Hathaway, Nvidia, and JP Morgan Chase as the top ten. The annual return over the last ten years is 12.35% with its best year hitting 33.51%, and its worst year bottoming at -5.13%.
- The S&P 500 identified as $VOO has the same top ten holdings as $VTI. The difference, and something noteworthy, is that the S&P 500 has 500 stocks and is exclusively large cap stocks, but the Total US Stock Market fund has 4,100 stocks which also include small and mid-cap stocks. The ten year annual return for the S & P 500 is 12.7% with the worst year hitting -4.42%, and the best reaching 32.33%.
- Small Cap ETF otherwise known as $VB, is another quality ETF to consider for your portfolio. Unlike the Total US Stock Market fund and the S&P 500, this Small Cap ETF has Charles River Labs, Avantor, Bio-Techne, Pool Corp, Diamondback Energy, PerkinElmer, Entegris, IDEX, VICI Properties, and Novavax as its top ten holdings. The worst year for Small Cap was -9.3%, and the most lucrative was 37.8%, averaging 10.57% for a ten year annual return.
- Growth Stocks noted as $VUG is another strong contender for many investors’ portfolios. Apple, Microsoft, Amazon, Facebook, Google Class A and Class C, Tesla, NVIDIA, Visa, and PayPal comprise the top ten holdings for Growth Stocks. Notice that there is some crossover in this stock as with the Total US Stock Market fund and the S&P 500 fund. These are fundamentally strong stocks. The ten year annual return for Growth Stocks was 13.74%, with its high reaching 40.16%, and its low plunging to -3.32%.
- Real Estate Fund $VNQ is another strong ETF and a great option to diversify your portfolio. This fund consists of Vanguard RE II Index, American Tower Corp, Prologis, Crown Castle Int’l, Equinix, Public Storage, Digital Realty, Simon Property Group, SBA Comm., and Welltower as its top ten stocks. The best year for the Real Estate fund was 40.38%, averaging 6.48% for a ten year return. Real Estate fund’s worst year dipped to -5.95%.
- Tech Stocks $VGT is another great option with a sector focus if you like to add this for diversification. Its top ten stocks include Apple, Microsoft, NVIDIA, Visa, PayPal, Adobe, Mastercard, Salesforce, Cisco Systems, and Intel. The worst year for $VGT was 2.52, the highest was 48.68%, and the ten year annual return was 18.41%.
- High Yield Dividend, $VYM, includes a good variety of companies with the top ten being JP Morgan Chase, Johnson & Johnson, Home Depot, Procter & Gamble, Bank of America, Exxon Mobil, Comcast, Verizon, Intel, and Cisco Systems. The worst year took this fund to -5.87%, the best reached 30.26%, and an average for a ten year annual return was 11%.
- Total World Market otherwise known as $VT holds Apple, Microsoft, Amazon, Facebook, Tesla, Google Class A and Class C, UnitedHealth Group, Johnson & Johnson, and NVIDIA. This ETFs best year was 26.8% and the worst year was -9.67%. The ten year annual return was 8.2%.
- Emerging Markets is denoted as $VWO with its top ten holdings including Taiwan Semiconductor, Tencent, Alibaba, Reliance, Meituan, JD.com, Inc., Taiwan Semiconductor ADR, Infosys, Vale SA, and China Construction Bank. If you are unfamiliar with these companies, unlike those listed in the other ETFs, remember that these are companies from countries that have developing economies such as India, Russia, Saudi Arabia, Pakistan, and Mexico. Economists and investors look at political and social stable countries or those that have little unrest with consistent economic growth as emerging markets. This particular ETF has a ten year annual return of 1.12% with its best year at 31.38%, and its worst at -15.35%.
- Finally, Bonds noted as $BND is the last ETF that I would like to bring to your attention. The top three holdings for $BND are Federal National Mortgage Association, US Treasury Notes, and US Treasury Bonds. The annual return was 2.75%. The highest yield for Bonds ETF was 8.71%, and -2.14% was the lowest. While the returns on this are not as favorable, a fund like this should still be looked at and considered for diversification should your situation require this type of fund.
We all have different goals and timelines but remember to keep it simple with investing. Believe it or not, just utilizing a combination of these top ten ETFs can make you a millionaire. Remember, however, that choosing your investments properly is only a small part of the process. If you want to propel your journey, you will need discipline to stick to your budget and your plan. Wasting time is only wasting money. The beauty of compound interest is on the side of those who get into the market sooner rather than later. Any amount is better than nothing; it is fine to start small and build up your portfolio. Just start and you will be on your road to millionaire status and financial freedom. If you need further help developing your step-by-step plan, or lack the education is holding you back from getting started Click here to learn more!