Could Buying the iShares Russell 2000 Growth ETF (IWO) Today Set You Up for Life?

Core Insights - Investing in small-cap stocks can be a beneficial addition to a portfolio, but there are multiple options available for investors looking to grow their wealth over time [1][3]. Investment Returns - Historical data from 1802 to 2021 shows that stocks have an annualized nominal return of 8.4%, outperforming bonds (5%), bills (4%), gold (2.1%), and the U.S. dollar (1.4%) [1]. - An investment of $6,000 annually at an 8% growth rate can grow to $1,554,339 over 40 years, while $12,000 annually can reach $3,108,678 in the same period [2]. Growth Stocks and ETFs - To accelerate portfolio growth, investors may consider adding growth stocks through growth-oriented ETFs [3]. - The iShares Russell 2000 Growth ETF focuses on smaller companies with significant growth potential, currently priced at $308.52 with a 2.60% increase [4][5]. Performance Comparison - The iShares Russell 2000 Growth ETF has shown average annual gains of 18.69% over one year, 14.33% over three years, 8.86% over five years, and 9.63% over ten years [5]. - In comparison, the Vanguard S&P 500 ETF has outperformed the iShares Russell 2000 Growth ETF across all time frames, with gains of 21.48% (1 year), 22.63% (3 years), 17.58% (5 years), and 14.60% (10 years) [6]. ETF Composition - The iShares Russell 2000 Growth ETF includes 1,090 companies with an overall price-to-earnings (P/E) ratio of 26.5, featuring top holdings such as Bloom Energy (1.59%) and Credo Technology (1.46%) [7]. - Unlike the S&P 500, which is heavily concentrated in its top 10 holdings, the iShares Russell 2000 Growth ETF maintains a more diversified portfolio [7][8]. Alternative Investment Options - Other options for including small companies in a portfolio include the Vanguard Total Stock Market ETF, which has an average annual gain of 12.63% over one year, 19.50% over three years, 13.72% over five years, and 13.62% over ten years [9]. - The Vanguard Small-Cap ETF, which includes over 1,300 companies, is another alternative for investors seeking exposure to both growth and value-oriented small-cap stocks [10].