For many investors, building a portfolio with a value of $1 million or more is the ultimate goal. Moreover, it's a realistic ambition for many investors.  So, today, let's imagine how a hypothetical investor might build a $1 million portfolio using one simple ETF: the Vanguard S&P 500 ETF (VOO 1.12%).

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Why the Vanguard S&P 500 ETF is a smart choice

Let's start by considering two very important aspects of how to achieve a portfolio value of $1 million or more:

1. The portfolio's growth rate
2. The fee structure of the portfolio

Let's examine the growth rate first. The Vanguard S&P 500 ETF tracks the S&P 500, one of the largest, most important stock market indexes in the world. It's considered a benchmark index and is often referenced by media outlets as a stand-in for the stock market as a whole.

The index is weighted by market capitalization, meaning megacap stocks like Nvidia, Microsoft, Apple, and other "Magnificent Seven" stocks comprise a large portion of the index. Meanwhile, it boasts many other stocks from various sectors (e.g., financial, energy, consumer discretionary, and healthcare), but those stocks make up a smaller percentage of the index compared to big tech.

At any rate, the S&P 500 has generated steady returns over the decades, making it one of the best ways to invest. Over the last 10 years, the S&P 500 has generated a total return of nearly 238%, which works out to a compound annual growth rate (CAGR) of 12.9%. The index's average annual return slips slightly to about 10.8% if we examine 30 years' worth of data, extending back to 1995. So, to remain conservative in our estimates, let's assume the fund can generate an 11% CAGR over the next 10 years.

Now, let's turn to fees. The fund charges an expense ratio of 0.03%. That means for every $10,000 invested in the fund, only $3 per year is paid in fees. As you scale up the amount of the investment, it's easy to see why a low fee structure is so important. If someone invests $100,000, they'll only pay $30/year in fees; increase the total investment to $500,000, and they surrender only $150/year in fees.

Needless to say, the Vanguard fund's extremely low expense ratio is great for investors; it means they keep more of their nest egg hard at work -- helping them reach their investment goals more quickly.

How the Vanguard S&P 500 ETF could make you a millionaire by 2035

Now, let's break down what sort of initial investment someone would need to make in order to reach $1 million by 2035. By working backwards, starting with a final value of $1 million, a 10-year time horizon, and an CAGR of 11%, it becomes clear that a person would need to invest roughly $350,000 in the Vanguard fund today to reach a $1 million portfolio by 2035.

Thankfully, due to the low fee structure of the Vanguard fund, our hypothetical investor would pay only about $100 in fees in the first year. As their portfolio grows, they would pay between $100 and $300 annually, as the portfolio increases in size -- an almost negligible amount, given the size of the portfolio.

Finally, it's important to remember that 10 years is not that long when it comes to investing. Indeed, by stretching the time horizon to 20 years and keeping the same CAGR of 11%, an investor could reach $1 million starting with only $124,000. By extending the length of time to 30 years, an investor could hit $1 million starting with only $44,000.

In other words, the sooner you start, the easier it is to achieve the goal of a $1 million portfolio. Time, patience, and a simple ETF are the only necessary ingredients.