Investing $500 Monthly in SMH Since 2016 Yields $495K

According to a report by 24/7 Wall St., if an investor had put $500 a month into the VanEck Semiconductor ETF (SMH) starting in June 2016 and added $500 every month, the account would be worth approximately $495,000 this week. Total contributions over the ten years amount to $60,500, with the rest being returns generated by the ETF.

Details

The VanEck Semiconductor ETF (SMH) focuses on major semiconductor companies such as NVIDIA, Intel, and TSMC. The semiconductor sector has experienced massive growth over the past decade due to rising demand for chips in AI, cloud computing, and electric vehicles.

According to the math, a $500 monthly investment for 120 months (10 years) yields a return of over 700% on contributions, demonstrating the power of compounding and sector-specific growth.

Context

This hypothetical scenario illustrates how regular investment in a single sector can generate exceptional returns, but it does not account for concentration risk. SMH has experienced sharp drawdowns during downturns, such as the 2022 correction.

What This Means for Investors

The example highlights the benefits of disciplined, long-term investing, but it is not a recommendation to invest in SMH or any other fund. Investors should diversify their portfolios and avoid overconcentration in a single sector.