This simple stock market ETF can turn £99 a week into £594,698

Building wealth in the stock market doesn't have to be complicated today. Just buying a cheap index fund and adding to it every week or month will do the trick.

Because of the power of compounding returns, even small amounts can eventually lead to a jaw-dropping result.

Keeping things nice and simple

I Vanguard FTSE 100 UCITS ETF (LSE: VUKE) tracks the performance of the UK's 100 largest companies. The list is rebalanced quarterly to reflect the rise and fall of the companies' market value.

In the latest change, the struggling fashion house Burberry it was replaced by insurance Hiscox. It's like teams being relegated and promoted to the Premier League.

With a combination of dividends and share price dividends, the historical return of the FTSE 100 is just under 8%. There is no guarantee that it will continue for years to come. It can be more or less.

However, if this trend continues, then the Vanguard FTSE 100 ETF's return should be similar.

There are two versions of the investor fund: distributive and accumulative. The first is where income is paid, and the second automatically returns dividends back to the fund.

What's in it?

Here are the top 10 ETF holdings (as of August 31).

All these are truly global firms. I personally hold four of them in my portfolio (AstraZeneca, HSBC, British American Tobacco, and Diageo), and have had my eye on RELX data analysis for many years.

One thing to remember here is China. Beijing recently announced its biggest economic recovery package since Covid. But if that fails to boost growth and the economy turns sour, it could drag down FTSE 100 commodity stocks and affect the index's performance.

From the beginning

Let's assume that I can invest £99 a week – the equivalent of £429 a month – in this ETF and it delivers the same return in the future. Here's what will happen in 10, 20, and 30 years.

As we can see, the benefits start slowly and then accelerate as integration begins to take hold. In fact, the return potential of the denominator is so great that the sum would be around £3m after 50 years.

A century later, it will be over £135m!

However, unless there are major advances in longevity science, I think 20-30 years is a more reasonable time frame for most investors than a century.

Why are you committed to this?

This is just £99 per week and an average return of 7.9%. But why stick with the FTSE 100? Average historical return of S&P 500 – America's 500 largest companies – equals 10.5%.

If I can build a portfolio of stocks, or a combination of different index trackers, similar to this performance, this can make a huge difference to my returns. Likewise adding more money.

Let's recalculate the numbers using an average return of 10.5% and £150 invested per week.

In this case, the figure after 20 years will not be much longer than the total of 30 years in the first example. That's the difference a few percent of investment returns can make over time!