Can You Retire a Millionaire with ETFs Alone?

Stock investing can be time-consuming and difficult, requiring you to spend hours reading about lots of companies, evaluating their financial statements, and deciding which ones to invest in and when to buy -- and eventually, sell -- the shares. Thus, many people turn to professionally and actively managed mutual funds, or to the typically far less costly yet arguably better index funds, which come in mutual fund and exchange-traded fund (ETF) forms. ETFs have been growing in popularity due to how easy it is to get in and out of the stock-like funds.

So... can you get by in your investing life sticking mainly or entirely to ETFs? You sure can -- and they can even help you retire a millionaire. Read on.

Image source: Getty Images.

What are ETFs?

There's a lot to like about ETFs. They're technically funds (thus the "F" in their acronym), but they trade like stocks on exchanges such as the New York Stock Exchange or the Nasdaq. As funds, each share will distribute your money across multiple assets -- perhaps hundreds or thousands of stocks -- offering easy diversification.

Unlike mutual funds, which might require you to spend a minimum of several hundred or thousand dollars on their shares, you can buy as little as a single share of an ETF. Indeed, you may even be able to buy a fraction of a share, via some good brokerages.

Consider index-fund ETFs

Many ETFs are index funds, tracking the performance of a particular index (such as the S&P 500) by owning most or all of what the index contains, in similar proportions. For most of us, it's hard to beat index funds as investments, because good, low-cost index funds are an easy way to invest in stocks and enjoy solid returns over the long run.

The long-term average annual return of the stock market is close to 9% or 10%, and a broad index fund that tracks the overall market will deliver returns roughly the same as the market. The table below shows how you might arrive at millionairehood earning an average rate of 8% over long periods:

Data source: Calculations by author.

What are some good ETFs to consider?

Here are some good low-cost index-fund ETFs:

Data source: Morningstar.com.

Image source: Getty Images.

Note that there is a wide variety of index funds out there, and that the ones above are a small (but respectable) selection. Some will have your money focused mainly on small companies, which are able to grow more quickly (though they don't always do so), while others focus only on large companies, which can be more stable and can offer meaningful dividend yields (though they don't always do so). You might distribute your money across a handful of funds, or you could do perfectly well with just one or two very broad-focused ones.

Here are a few more ETFs to consider, that can give your portfolio exposure to real estate, bonds, dividends, and more:

Source: Morningstar.com.

However you go about it, consider including some or many ETFs in your portfolio -- they can definitely help you become a millionaire by retirement.