Investing your money in these exchange-traded funds is safer than buying cryptocurrencies and could easily be more rewarding in the long run.
Despite its recent cryptocurrency crash, Bitcoin (BTC), Ethereum (ETH) and especially Dogecoin (DOGE) had an incredible year. Over the past 12 months, Dogecoin’s price has increased by nearly 13,000%. If you had invested € 1,000 in cryptocurrency a year ago and resisted the ups and downs, you would have nearly € 130,000 today.
However, as an investment, if we look at Dogecoin it is incredibly risky. Its dramatic returns have been largely driven by a wave of retail investors driving its price up, but its fundamentals don’t seem strong enough to hold these values.
Unless Dogecoin makes a few tweaks to give it a better competitive edge, there’s a good chance it won’t be around in the long run. That said, there are many other investments that are much safer and can help you make a lot of money.
These are the ETFs that could make you a millionaire
How to invest in ETFs. The Complete Guide
Vanguard S&P 500 ETF
L’Vanguard S&P 500 ETF (NYSEMKT: VOO) (ISIN: US9229083632) follows the benchmark S&P 500, so its portfolio includes around 500 of the largest publicly traded US companies. The S&P 500 is often seen as a barometer of the overall performance of the US stock market, and an S&P 500 ETF will essentially move in sync with that barometer.
This makes S&P 500 ETFs less risky than other types of investments. While individual stocks or the entire market can experience volatility, the S&P 500 has proven time and again that it can recover from stock market crashes and go higher.
Since the inception of the S&P 500, its value has increased at a rate of average yield of about 10% per year. While investors in the future will not consistently experience those returns, if the market continues to follow its historical trends, you can expect the S&P to continue to deliver average growth over time of around 10% per year.
While this ETF may be a relatively safe option, it can still help you get rich. Assuming the 10% annualized rate of return, here’s what it would take for that stake alone to make you a millionaire:
- Invest 550 euros a month for 30 years
- Invest 200 euros a month for 40 years
- Invest 1,500 euros a month for 20 years
Vanguard Information Technology ETF
The Vanguard Information Technology ETF (NYSEMKT: VGT) (ISIN US92204A7028) is a niche fund that only includes stocks from the technology sector. Its portfolio includes 357 stocks. Among his major holdings are Apple, Microsoft e NVIDIA.
Niche and sector ETFs can be riskier than broad market funds because they are not as diversified. For this reason, it’s especially important to make sure you have a well diversified portfolio if you choose to invest in this ETF.
On the plus side, tech stocks in general tend to grow faster than companies in other sectors. Since this fund was established in 2004, it achieved an average rate of return of around 13% per annum. Again, this doesn’t mean you should expect to earn a return to that level year after year. But it does offer a hint as to what kind of long-term annualized earnings you might expect if you hold this ETF for decades.
Based on that expected 13% annualized average return, here’s what it would take for an investor to hit one million euros:
- Invest 300 euros a month for 30 years
- Invest 85 euros a month for 40 years
- Invest 1,050 euros a month for 20 years
Vanguard Russell 2000 Growth ETF
L’ETF Vanguard Russell 2000 Growth (NASDAQ: VTWG) (ISIN; US92206C6232) tracks the Russell 2000 Growth Index, which includes 1,209 shares of smaller companies.
Small cap stocks tend to be riskier than larger companies. Their stock prices are often more volatile, and their core assets can be less secure. But on the bright side, small-cap valuations tend to grow faster too.
This particular ETF was established in 2010 and ever since produced an average yield of around 15% per year. Assuming an average annualized return of 15%, here’s what it would take for an investor to accumulate at least a million euros with this ETF:
- Invest 200 euros a month for 30 years
- Invest 50 euros a month for 40 years
- Invest 850 euros a month for 20 years
A solution to get rich slowly
There are never guarantees when investing in the stock market, but you can take steps to reduce risk and maximize your returns. Dogecoin and other cryptocurrencies are incredibly risky investments, and there is a good chance you will lose money on them. By choosing a safer option and taking a long-term view, you can give yourself a far better chance of becoming a millionaire.
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Complete TRADING KIT!
Investing in ETFs
There is no doubt that ETFs are experiencing a real boom, climbing the ranking of the most attractive financial instruments for investors.
ETFs are as easy to trade as stocks and at the same time allow you to benefit from diversification, as is the case with mutual funds (but with drastically lower costs). This combination of attributes has made ETFs one of the most present financial assets in investors’ portfolios.
If you want to better understand what ETFs are, how they work and how to build ETF-based investment strategies, check out ours ETF Guide.
How to invest in ETFs
Investing in ETFs is very easy: you just need to open a brokerage account with a reputable broker and find an ETF that fits your budget and investment goals. If you are looking for help with this, I recommend that you visit our rich one section dedicated to ETFs.
ETFs are financial instruments that are regulated and listed on the main world stock exchanges. In order to invest in ETFs independently, it is therefore necessary to go through an authorized broker.
Among the many brokers and banks that allow you to trade on ETFs, we have narrowed the circle to those with the lowest commissions, those who offer the most ETFs and those with the best trading platforms. More specifically, among the various parameters taken into consideration, we have given greater importance such as commissions, account maintenance costs and the possibility of trading ETFs listed on both the Italian Stock Exchange and European stock exchanges.
Best Brokers for ETF trading
There are many Brokers who give the opportunity to invest in ETFs, not all are the same and for this reason the choice may not be easy for those who have no experience in this sector.
The doveinvestire.com portal, thanks to the experience of our traders and analysts, has selected some of the best CFD Brokers following some fundamental criteria such as:
Safety: to be taken into consideration, the Broker must necessarily be regulated by an international body;
Commissions: the Broker must have an advantageous commission plan for the trader;
Trading platform: the platform must be simple and intuitive but, at the same time, complete with the necessary tools;
Customer service: anyone may need support, especially when you are in trouble and your money is at stake. A quick assistance service ready to answer any question is a necessary requirement for a good Broker.
Below is the updated list of the best brokers to trade on ETFs:
CFDs are complex instruments and come with a significant risk of losing money quickly due to leverage. Between 74 and 89% of retail investor accounts lose money when trading CFDs. Consider if you understand how CFDs work and if you can afford to take this high risk of losing your money.
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