Do you have $500 to invest in stocks? Put it in this index fund.

One of the biggest misconceptions about investing is that it requires a lot of money. That’s not true at all. You can start with a portion of the share and add more if possible. $500 is more than enough, but if you choose the right investments and take the time, it can grow to thousands of dollars.

For example, let’s say you invested $500. Vanguard Growth ETF (VUG -0.13%) Created in 2004, it now has nearly $4,000 in hand. Now, imagine if you made that investment over and over again over many years…

In fact, if you have $500 to invest in the new year, the Vanguard Growth ETF is still a great place to park your money.

Here are three reasons why.

1. Growth investment becomes easier

Index funds make investing easy even for people who don’t have the time or interest to follow a lot of individual companies. These funds are constructed to mimic stock market indices.it could be S&P500, Nasdaq Compositeor the Vanguard Growth ETF. CRSP US Large Cap Growth Index.

The Vanguard Growth ETF focuses on large-cap growth stocks. The fund has 221 participating companies, with a median market capitalization of $763 billion. The fund tackles several industries, but technology is the largest. About 53% of the fund is allocated to tech stocks, followed by consumer discretionary stocks at 21%.

Despite holding over 200 stocks, the top 10 stocks account for more than 54% of the fund.In addition to “Magnificent Seven” stocks in the top 10 Eli Lilly and visa.

2. We have an excellent track record

The Vanguard Growth ETF is tilted toward growth, giving it strong investment returns. This fund has outperformed the S&P 500 over his 20 years. While there is no guarantee that it will continue to do so, it is a strong track record that investors can feel comfortable with as they look to the future.

Data by YCharts.

Importantly, index funds are not static. As the indexes we track change, they evolve as well. That’s the secret sauce that makes index funds so effective. Once a noteworthy company emerges, it is likely to be included in the relevant index, which constantly moves to ensure its holdings meet the required parameters. It’s like portfolio management on autopilot.

3. It is generous to fund holders.

Even if you go to a professional investment manager and tell them you want above-market returns, they’ll likely balk at the fees they charge for their services. Ironically, most experts cannot beat the overall market in the long run.

When you invest in a Vanguard Growth ETF, you pay a small percentage to the fund’s administrator. This fee, called the expense ratio, is just 0.04%. In other words, he only pays $0.20 for his initial $500 investment.

The fund also pays a dividend with a yield of 0.52% as of this writing, so the dividends more than cover the cost of investing in the fund. You can freely reinvest the remaining dividends to buy more shares and further increase your compounding returns.

When you look at the overall package that Vanguard Growth ETF offers, there’s a lot to like. Earn market-beating returns at almost zero cost, plus dividends. Of course, index funds can fluctuate just like the stock market. Your best bet is to put that $500 to good use and continually add to your investment if possible.

You may be surprised at how much your investments will grow over the long term.