I'm a big fan of investing in quality shares and then buying and holding them for the long term.
This is a tried and tested approach to investing and I continue to believe it is one of the best ways to grow your wealth.
However, I live and breathe the share market and also benefit from talking in person with management and having tools available to research companies thoroughly.
Not everyone is as lucky as I am in that regard, nor do they have as much time to spend on building their investment portfolios.
Luckily, there are ways around this. And one of those ways is buying exchange traded funds (ETFs).
But which ASX ETF would be a great way to generate market-beating returns that allow you to retire early? Well, one candidate could be the VanEck Morningstar Wide Moat ETF (ASX: MOAT).
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Retire early with the MOAT ETF
The VanEck Vectors Morningstar Wide Moat ETF is a very popular option for Aussie investors.
At the last count, there was just under $1 billion invested into it. This makes it larger than companies such as Myer Holdings Ltd (ASX: MYR) and DroneShield Ltd (ASX: DRO).
And it isn't surprising to see that it is so popular. The fund manager, VanEck, explains what it is invested in. It said:
MOAT gives investors exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages.
These are the type of companies that legendary investor Warren Buffett looks for when buying stocks for Berkshire Hathaway (NYSE: BRK.B). And given that the Oracle of Omaha has almost doubled the market return since the 1960s, it is clear to see that this investment focus works.
And the proof is in the pudding. Over the last 10 years, the index the fund tracks has delivered an average return of 16.7% per annum.
This means that a single $20,000 investment a decade ago would have turned into over $90,000 today.
Compounding your way to wealth
The above return was based on a single investment. Imagine what could happen if you made regular contributions to the MOAT ETF.
Based on the last 10 years, a starter investment of $20,000 and then $500 each month would have ballooned into a massive $240,000 today.
And that's just 10 years! These funds would continue to compound over the next 10 years, growing into something mouth-watering.
Firstly, there's no guarantee that the MOAT ETF will continue to outperform the market in the future. But let's assume that it does.
If you invested $20,000 today and then $500 each month thereafter, your investment portfolio would grow to be worth over $1.2 million in 20 years if you achieved a return in line with the past 10 years.
That certainly would make for a good retirement!
It is also worth noting that the original $20,000 investment isn't as important as you would think. Skipping that, starting at zero, and just investing $500 each month would still turn into over $800,000 in 20 years, all else equal. That's food for thought for investors.
