As we covered here earlier today, there are plenty of exchange traded funds (ETFs) for investors to choose from on the Australian share market.
One of the most popular options out there is the Vanguard Australian Shares Index ETF (ASX: VAS).
It seeks to track the return of the S&P/ASX 300 Index before taking into account fees, expenses, and tax.
This index might not be as closely followed as the illustrious S&P/ASX 200 Index (ASX: XJO), but it isn't short of quality.
It provides investors with quick and easy access to 300 of the largest companies on the Australian share market.
This means you'll be buying a diverse group of shares such as mining giant BHP Group Ltd (ASX: BHP), banks like Commonwealth Bank of Australia (ASX: CBA), and retailers including Woolworths Group Ltd (ASX: WOW).
Another positive with the ETF is that it pays investors a quarterly dividend, with an annual yield currently sitting at 4.5%.
Overall, this could make it a great option for a retirement portfolio.
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What would it take to generate $30,000 of retirement income?
If you're in retirement and already have a large lump sum to invest, it would take a rather devilish investment of $666,666 into the ETF to yield $30,000 in dividend income each year at present.
But if you don't have this level of money available to invest, then you could look at making it a long-term quest.
While past performance is no guarantee of future performance, the share market has historically provided investors with an average total return of 10% per annum.
If it were to do the same over the next 20 years, this ETF followed suit, and you reinvested your dividends, then a $10,000 annual investment would grow into the desired amount a few months after the end of the second decade.
At that point, you can sit back and reap the rewards of your investments. You will also be left with a portfolio that still has the potential to grow at a decent rate even after cashing out your dividends.
