Where Will VTI Be in 20 Years? Here’s What History Suggests
Where Will VTI Be in 20 Years? Here's What History Suggests
Low-cost index funds are often some of the best ways for most people to invest in stocks. Instead of picking stocks or paying high fees for actively managed funds, low-cost index funds like the Vanguard Morningstar Total Stock Market ETF (VTI +0.39%) let you own a diversified portfolio of "all the stocks" at once. VTI is one of the best total stock market index funds because it holds 3,519 U.S.
stocks. It's even more diversified than the S&P 500 index (^GSPC +0.41%), because VTI holds small and mid-caps. This exchange-traded fund gives you exposure to all sectors of the U.S.
economy and companies of all sizes. The Vanguard Morningstar Total Stock Market ETF has been around since May 2001. Over the past 25 years, it's delivered annualized returns of 9.44%.
That's a bit below the S&P 500 average return of 9.98% since 1928. But it's still a strong rate of return that can build significant wealth for long-term investors. Let's look at how much your money could grow in VTI in the next 20 years based on its historic average return.
VTI: 20 (more) years of 9.44% annualized returns In the stock market, past performance can't predict future returns. The Vanguard Morningstar Total Stock Market ETF might not keep delivering that same 9.44% return for the next 20 years. The stock market could crash, the economy could stagnate, interest rates could stay high.
VTI could deliver annualized returns of 5%, 15%, 0%, or lower. No one knows the future. But let's assume that VTI keeps delivering its long-term (past 25 years) average annual return of 9.44% for the next 20 years, matching the average returns since inception.
If you invested $10,000 today in VTI and it compounded at 9.44% for the next two decades, after 20 years you'd have $60,747. If you started with $0 and invested $500 a month in VTI earning 9.44% annualized returns, after 20 years, you'd have $322,542. Either way, time in the market does the heavy lifting.