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

ETF spelt out on cube blocks with rising arrows.
ETFs

Are these record-breaking ASX ETFs now too expensive to buy?

Should you ever buy an ETF at an all-time high?

Read more »

A smiling woman with a satisfied look on her face lies on a rug in her home with her laptop open and a large cup on the floor nearby, gazing at the screen. researching new ETFs
ETFs

Why Vanguard MSCI Index International Shares ETF (VGS) is a great buy for almost anyone

I love this ETF for its portfolio.

Read more »

Hand of a woman carrying a bag of money, representing the concept of saving money or earning dividends.
ETFs

Buy these ASX ETFs for easy passive income

These ETFs could be great options if you're looking for easy income.

Read more »

digitised face hovering above share investor looking at computer screens
Share Market News

The pros and cons of buying the Global X Fang+ ETF (FANG) right now

Should we take a bite of the FANG ETF?

Read more »

A young man wearing glasses writes down his stock picks in his living room.
ETFs

3 reasons to buy another ASX ETF over the Vanguard Australian Shares Index ETF (VAS)

Here’s why the VAS ETF may not always be the best choice.

Read more »

ETF spelt out with a rising green arrow.
ETFs

3 excellent ASX ETFs to buy in March

Here are a few ETFs to consider this autumn.

Read more »

a man smiles broadly as he holds up five fingers on one hand and two fingers on the other hand.
Technology Shares

How to invest in the magnificent seven stocks on the ASX

Want to invest in the magnificent seven? It's easy on the ASX.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
ETFs

14% in 4 months: How has the Vanguard Australian Shares ETF (VAS) managed it?

These ETF investors have had a massive few months.

Read more »