ETFs, or Exchange-Traded Funds, are investment funds traded like individual stocks. ETFs are designed to track the performance of a particular index, commodity, bond, or basket of assets.

One key advantage of ETFs is their ability to offer diversification within a single investment. Many ETFs hold anywhere from 100 to thousands of individual investments. They expose investors to a broad range of assets, similar to mutual funds, but trade on exchanges like stocks.

Many ETFs offer lower fees compared to traditional mutual funds, and they offer transparency as their holdings are disclosed daily, allowing investors to see exactly what assets they own within the fund.

Overall, ETFs provide a flexible and cost-effective way for investors to gain exposure to various markets and asset classes while offering liquidity and diversification.

TLDR; ETFs offer a basket of stocks and are a no-brainer investment for just about any portfolio.

ETFs are the best way for most investors to become a millionaire. They provide predictable growth and income and most importantly, limit individuals from making poor choices on choosing the wrong stocks.

5 ETFs to Make You a Millionaire

Below are 5 of the most popular ETFs amongst individual investors. Contributing regularly to any of these ETFs over 20 or more years will make you a millionaire.

Vanguard 500 Index Fund ETF - VOO

The Vanguard 500 Index Fund is one of the most popular ETFs on the planet. VOO aims to replicate the performance of the S&P 500 Index, which consists of 500 of the largest U.S. companies across various industries. Vanguard is known for its industry-leading low-expense fees. At just 0.03% ($3 per $1000) it’s one of the cheapest ETFs on the market.

VOO is often considered one of the best investments for the average individual investor for several reasons:

1. Broad Market Exposure: VOO offers exposure to the 500 largest U.S. companies, covering various sectors and industries. This diversification across leading companies provides a snapshot of the overall U.S. stock market performance.

2. Low-Cost and Efficiency: Vanguard, known for its low-cost approach, offers VOO with a low expense ratio of just 0.03%.. This cost efficiency means more of the investment returns go directly to investors.

3. Passive Management: VOO is passively managed, aiming to replicate the performance of the S&P 500 Index rather than relying on active management decisions. This approach often outperforms many actively managed funds over the long term.

4. Historical Performance: Historically, the S&P 500 has delivered solid returns, averaging around 7-10% annually over long periods. While past performance doesn't guarantee future results, the track record of the S&P 500 Index is appealing to many investors.

5. Liquidity and Accessibility: Being an ETF, VOO trades on stock exchanges, providing liquidity and the ability to buy and sell throughout the trading day at market prices. This accessibility makes it easy for investors to enter and exit positions.

6. Long-Term Investment Potential: VOO is often seen as a long-term investment option, suitable for investors looking for exposure to the overall U.S. stock market and aiming for steady growth over time.

Overall, VOO is considered a great investment for those seeking a simple, low-cost way to gain exposure to a diversified basket of leading U.S. companies and participate in the potential growth of the stock market.

1-year return: 13.86%
5-year return: 12.51%
10-year return: 11.78%
Dividend Yield: 1.4%
Expense ratio: 0.03% ($3 per $1000)
Total Holdings: 510

Top 10 Holdings in VOO:

1. Microsoft

2. Apple

3. Amazon

4. Nvidia

5. Alphabet (Google)

6. Meta

7. Berkshire

8. Tesla

9. United Health

10. Eli Lily

VOO will make you a millionaire in:
• 26 years at $500/month
• 21 years at $1000/month

A $10,000 investment with no additional contributions in 30 years will be worth: $342,411

Vanguard Total Stock Market ETF - VTI

VTI is like a one-stop shop for the U.S. stock market. It's an ETF from Vanguard that follows a big mix of American companies, from the giants to the smaller ones, across different industries. It's a hands-off kind of investment since it tries to match the performance of a whole bunch of companies without active management. It's low-cost and easy to buy and sell because it's traded on stock exchanges. It's a way to invest in all U.S. publicly traded companies all at once without having to pick each one yourself.

1-year return: 16.61%
5-year return: 12.19%
10-year return: 11.15%
Dividend Yield: 1.4%
Expense ratio: 0.03% ($0.30 per $1000)
Total Holdings: ~3800

Top Holdings in VTI:

1. Microsoft

2. Apple

3. Amazon

4. Nvidia

5. Alphabet (Google)

6. Meta

7. Berkshire

8. Tesla

9. United Health

10. Eli Lily

VTI will make you a millionaire in:
• 26 years at $500/month
• 21 years at $1000/month

A $10,000 investment, with no additional contributions in 30 years will be worth: $283,461

Schwab US Dividend Equity SCHD

The Schwab U.S. Dividend Equity ETF aims to track the performance of the Dow Jones U.S. Dividend 100 Index, composed of high-dividend-yielding U.S. stocks. SCHD specifically targets companies with a history of consistently paying dividends, emphasizing stable and growing dividend income. It provides investors with exposure to established, financially robust companies across various sectors that have a track record of sharing their profits with shareholders through dividends. As an ETF, SCHD offers diversification and comes with a lower expense ratio, making it an option for investors seeking income through dividends within the U.S. stock market.

SCHD has gained popularity among young investors for several reasons:

1. Dividend Focus: Many young investors are attracted to dividends as they provide a regular income stream, which can be appealing to those seeking additional income or aiming for passive income growth.

2. Stability and Growth Potential: SCHD emphasizes companies with a history of consistent dividend payments. Young investors might appreciate the stability offered by these established, financially strong companies while still seeking growth potential.

3. Long-Term Investment Strategy: Young investors often have a long investment horizon ahead of them. SCHD's focus on dividends can align with its long-term investment goals, allowing for the power of compounding through reinvested dividends.

4. Diversification: SCHD holds a basket of dividend-paying stocks across various sectors. For young investors starting their investment journey, this diversification can be an attractive way to gain exposure to a broad range of established companies.

5. Low-Cost Approach: ETFs like SCHD typically have lower expense ratios compared to actively managed funds. For young investors who are cost-conscious, this cost-efficiency can be appealing.

Additionally, SCHD's emphasis on dividends aligns with some young investors' preferences for more conservative investment approaches while still participating in the potential growth of the stock market. SCHD has underperformed in 2023, but it also emphasizes the point that investors hold this for the dividend, as the dividend payout grew to new highs.

1-year return: -1.36%
5-year return: 10.69%
10-year return: 10.56%
Dividend Yield: 3.6%
Expense ratio: 0.06% ($0.60 per $1000)
Total Holdings: 106

Top 10 Holdings in SCHD

1. Verizon

2. Broadcom

3. Amgen

4. Abbvie

5. Home Depot

6. Coca Cola

7. Merk

8. Pepsi

9. Texas Instruments

10. UPS

SCHD will make you a millionaire in:
• 28 years at $500/month
• 22 years at $1000/month

A $10,000 investment, with no additional contributions in 30 years will be worth: $237,490

Schwab Large Cap Growth ETF - SCHG

SCHG refers to the Schwab U.S. Large-Cap Growth ETF. It's an Exchange-Traded Fund (ETF) offered by Charles Schwab that aims to track the performance of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index.

SCHG is one of the best low-cost and passive options to invest in the best growth companies in the US.

1. Investment Objective: SCHG seeks to provide investment results that correspond to the performance of large-cap growth stocks in the U.S. equity market. It focuses on companies exhibiting growth potential, typically within established sectors like technology, healthcare, and consumer goods.

2. Growth Emphasis: The ETF specifically targets companies that Schwab categorizes as "growth" stocks. These are companies expected to grow at a faster pace compared to the overall market or their industry peers. Growth companies often reinvest earnings for expansion and innovation, potentially leading to higher stock prices.

3. Diversification: SCHG aims to offer exposure to a diversified basket of large-cap growth stocks, allowing investors to access a range of companies across various sectors that are deemed to have growth prospects.

4. Low-Cost Approach: Like many ETFs, SCHG typically comes with one of the lowest expense ratios in growth ETFs at just 0.04%, making it a cost-effective investment option for those seeking exposure to large-cap growth stocks.

5. Potential for Capital Appreciation: Investors interested in the potential for capital appreciation over the long term may find SCHG appealing due to its focus on companies expected to experience above-average growth.

Investing in SCHG can be a way for investors to access a specific segment of the U.S. stock market—large-cap growth companies—while aiming for potential growth opportunities within their investment portfolios. As with any investment, it's important to consider individual investment goals, risk tolerance, and overall portfolio diversification.

1-year return: 36.21%
5-year return: 17.02%
10-year return: 14.58%
Dividend Yield: 0.43%
Expense ratio: 0.04% ($0.40 per $1000)
Total Holdings: 253

Top 10 Holdings in SCHG:

1. Apple

2. Microsoft

3. Amazon

4. NVIDIA

5. Google

6. Tesla

7. United Health

8. Eli Lilly

9. Visa

10. Broadcom

You will notice many of the same top 10 holdings as VOO & VTI. The difference is in their weight to the overall portfolio. SCHG’s top 10 stocks make up 55% of the entire portfolio compared to VOO’s 31%. So when the top 10 stocks do better, SCHG does better. This is also in the opposite direction – when the top 10 stocks fall heavily, so does SCHG.

SCHG will make you a millionaire in:
• 23 years at $500/month
• 18 years at $1000/month

A $10,000 investment, with no additional contributions in 30 years will be worth: $792,909

Invesco QQQ Trust

The Invesco QQQ Trust is an Exchange-Traded Fund that tracks the Nasdaq-100 Index.

Historically, the QQQ has shown periods of outperformance compared to the S&P 500 due to its heavy concentration in technology and growth stocks, especially during tech-driven market upswings. However, the S&P 500, representing a more diversified set of 500 large-cap companies across various sectors, has demonstrated consistent long-term performance and broader market representation.

5 Reasons why QQQ is one of the best-performing ETFs in the last 10 years:

1. Technology Focus: The Nasdaq-100 Index is heavily weighted toward technology stocks, making QQQ particularly known for its exposure to leading tech companies such as Apple, Microsoft, Amazon, Alphabet (Google), and others.

2. Diversification: While QQQ is heavily weighted in technology, it also includes companies from various other sectors, providing investors with exposure to a diversified range of large-cap growth companies.

3. Liquidity and Accessibility: QQQ is one of the most actively traded ETFs, offering liquidity and the ability to buy and sell shares throughout the trading day at market prices. It is listed on major stock exchanges.

4. Growth Emphasis: The ETF is often associated with growth investing due to its focus on companies with high growth potential, particularly in the technology and innovation sectors.

5. Performance: QQQ's performance is closely tied to the movements of the Nasdaq-100 Index, which historically has been influenced by the performance of its largest technology-related holdings. The 10-year annualized return of 17.21% is one of the best investments in the last decade.

1-year return: 37.63%
5-year return: 19.03%
10-year return: 17.21%
Dividend Yield: 0.43%
Expense ratio: 0.20% ($2 per $1000)
Total Holdings: 253

Top 10 holdings in QQQ:

1. Apple

2. Microsoft

3. Amazon

4. NVIDIA

5. Meta

6. Broadcom

7. Google

8. Tesla

9. Adobe

10. Costco

QQQ will make you a millionaire in:
• 23 years at $500/month
• 20 years at $1000/month

A $10,000 investment, with no additional contributions in 30 years will be worth: $1,744,755

Many of these ETFs hold the same stocks so we do not recommend owning all of them as you will have a lot of overlap in your portfolio.

VOO or VTI are similar, as are SCHG and QQQ.

Want simplicity? Just own VOO. The S&P 500 is often used as the benchmark for all other investments and investors - so why not just own the benchmark?