The Vanguard Australian Shares Index ETF (ASX: VAS) is the largest exchange-traded fund (ETF) on the ASX, and there's a method that allows investors to create a $1 million portfolio with it.
In my view, investing in (ASX) shares is the best way to build long-term wealth. That's because of the impact of companies reinvesting their profits, the power of compounding and dividend payments.
The VAS ETF allows investors to gain exposure to the S&P/ASX 300 Index (ASX: XKO), the 300 of the largest businesses on the ASX.
Investing in large businesses can be a good strategy due to the scale and cost advantages they offer over their smaller competitors. Names like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO) and National Australia Bank Ltd (ASX: NAB) feature towards the top of the holdings list of the VAS ETF.
Returns
The ability to make solid long-term returns is one of the key reasons why this fund can help an investor become a millionaire. Of course, past performance is not a guarantee, or even a reliable indicator, of future performance. But, it does show what VAS ETF is capable of.
Let's take a look at how strongly the Vanguard Australian Shares Index ETF has performed for investors recently.
Over the five years to 31 July 2025, it returned an average of 12.16%. Since inception on 4 May 2009, it returned an average of 9.4%. Neither of those figures includes the benefit of franking credits.
Without a crystal ball, it's hard to say what the future returns will be. But, of the two numbers, it would probably be more conservative to assume the lower number – 9.4% – will be what happens going forward.
How to make $1 million with the VAS ETF
One of the best things about investing in (ASX) shares is that we can invest in small increments, rather than a lump sum (as is required with a property).
If our personal finances allow, we can invest in Vanguard Australian Shares Index ETF (or another share investment) every month with say $500, $1,000 or $2,000.
I'll show how investing regularly and the power of compounding can help someone become a millionaire, assuming the Vanguard Australian Shares Index ETF compounded at 9.4% per year.
If someone invested $500 per month, it could turn into $1 million in less than 32 years.
If someone invested $1,000 per month, it could turn into $1 million in less than 25 years.
If someone invested $2,000 per month, it could turn $1 million in less than 18 years.
Of course, that's assuming the same level of investment throughout that whole period. If someone invested more as their personal finances improved during that time, they could reach $1 million sooner or gain more wealth over the same time period.
I'd describe the VAS ETF is a solid investment that can help us grow our wealth. But, I'm expecting certain individual ASX shares to perform more strongly than the VAS ETF.
