Investing $100 per month in this ASX ETF could make you a multimillionaire

I'm banking on this ETF to turbocharge my wealth.

| More on:
Businessman at the beach building a wall around his sandcastle, signifying protecting his business.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investing in ASX shares and exchange-traded funds (ETFs) has been proven to be one of the most consistent and reliable ways to build wealth in this country, provided it is done correctly.

The share market allows ordinary Australians to harness the amazing powers of compounding and improve their financial stability.

Of course, there are many quality shares and ETFs on the market that have the potential to be wealth creators. But I want to discuss one today that I think has the potential to make its investors multimillionaires over enough time. It's the VanEck Morningstar Wide Moat ETF (ASX: MOAT).

This ASX ETF is a rather interesting one. Instead of being an index fund, it is an actively managed fund, holding a concentrated portfolio of around 50 shares. These shares are all American companies. They are selected on their perceived possession of what's called an economic 'moat'.

What's in the moat?

A moat refers to a Warren Buffett-inspired concept that a company can possess an intrinsic competitive advantage that repels competitors.

This could be a strong brand (Apple or Coca-Cola). Or else a cost advantage in selling products (perhaps Wesfarmers Ltd (ASX: WES)'s Bunnings). It could even be selling a product that is hard for consumers to avoid using (Microsoft's Office suite for instance).

Some of the MOAT ETF's current holdings include companies like Disney, Nike, Alphabet, Campbell Soup, and Kellanova (Kellogg's). Oh and Buffett's own Berkshire Hathaway.

Immediately, we can see why these companies have been selected.

Disney is probably the most famous entertainment brand in the world.

The same could be said of Nike when it comes to sportswear.

It's pretty hard to find someone who doesn't use Alphabet's Google search engine.

No one can manufacture soups, stocks and sauces as efficiently as Campbell Soup.

And Kellogg's is almost synonymous with breakfast.

But the reason why I think this ETF has the potential to be a multimillionaire maker is its stellar track record.

How can this ASX ETF help you reach multi-millionaire status?

Since its ASX inception in 2015, the VanEck Wide Moat ETF has returned an average of 15.05% per annum (as of 30 November).

If one starts with $20,000 and invests $100 per month in this ETF, they would end up with over $2 million after 27 years. That's assuming this rate of return. That means that someone who started this process when they were 20 years old would easily be able to retire by the age of 47.

Of course, we can never assume that past performances will continue into the future. The next few years could easily see this ETF underperform or overperform to be fair, its historical performance.

However, given MOAT has been able to achieve an average of over 15% for almost eight years now, I think its unique approach is clearly successful. I invest in this ETF myself. And I'm hoping, and expecting, that it will play a role in getting my portfolio to seven figures and beyond one day.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Alphabet, Apple, Berkshire Hathaway, Coca-Cola, Microsoft, Nike, Wesfarmers and VanEck Morningstar Wide Moat ETF. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Apple, Berkshire Hathaway, Microsoft, Nike, and Wesfarmers. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $47.50 calls on Coca-Cola and long January 2025 $47.50 calls on Nike. The Motley Fool Australia has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Alphabet, Apple, Berkshire Hathaway, Nike, and VanEck Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

A man points at a paper as he holds an alarm clock.

3 highly rated ASX ETFs to buy and hold

Buy and hold investors might want to check out these top funds.

Read more »

The letters ETF with a man pointing at it.

Invest $10,000 into these ASX ETFs next week

These ETFs provide investors with access to some high quality companeis.

Read more »

Businessman at the beach building a wall around his sandcastle, signifying protecting his business.

Is the Vaneck Morningstar Wide Moat ETF (MOAT) a good long-term investment?

Is this ASX ETF a top pick to hold for years to come?

Read more »

ETF with different images around it on top of a tablet.

4 quality ASX ETFs to buy after the market sell-off

Here's why these funds could be buys after recent market volatility.

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.

Own Vanguard Australian Shares Index ETF (VAS) units? It's payday for you!

Find out what distribution VAS ETF is sending to bank accounts today.

Read more »

A young office worker is surrounded by peers who are clapping and congratulating her.

3 reasons I think this fantastic ASX ETF is a top buy

Quality is just one factor that makes this ETF is a great pick, in my opinion.

Read more »

Three people in a corporate office pour over a tablet, ready to invest.

4 ASX ETFs for growth investors to buy this month

These ETFs give investors easy access to large group of growth shares.

Read more »

A young woman with glasses holds a pencil to her lips as she is surrounded by the reflection of data as though she is being photographed through a glass screen project with digital data.

This compelling ASX ETF may be a better way to invest in Aussie stocks than Vanguard Australian Shares Index ETF (VAS)

This ASX ETF could be an even more effective investment than Vanguard’s.

Read more »