Could Investing $10,000 in IWM Make You a Millionaire?

If you’re feeling nervous about recent downturns in tech stocks and want to invest your money into a different part of the market, the iShares Russell 2000 ETF (NYSEMKT: IWM) might be on your radar. This small-cap stock ETF gives you exposure to nearly 2,000 small publicly traded U.S. companies. Buying small-cap stocks can be a good strategy to diversify your portfolio, especially if you’re heavy on major tech names.

But can IWM make you a millionaire? One downside to this small-cap stock ETF is that it has underperformed the S&P 500.

Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »

Let’s see what it takes to become a millionaire by investing in IWM and why it might not be the best choice for investors who want long-term growth.

Image source: Getty Images.

The iShares Russell 2000 ETF began trading for investors on May 22, 2000. That means the fund has a track record of almost 26 years since its inception date. In the past (nearly) 26 years, IWM has delivered average annual returns of 8.06%. That’s a lower growth rate than the S&P 500 index’s long-term average of 10% annual returns.

While 8.06% average annual growth can still make you a millionaire, it will take a long time.

Let’s say you invested $10,000 in IWM and the ETF keeps delivering its average annual return of 8.06%, year after year, and you leave your money invested to grow from compounding. After 30 years, you’d have $102,317. After 45 years, you’d have $327,283. And after 60 years, you’d finally get to $1 million. That’s an awfully long time to wait — longer than most people’s investing lifetimes.

So why do people buy small-cap stocks? A big reason is diversification. Sometimes investors want to include a wider range of stocks in their portfolios. If you’re worried about a possible artificial intelligence (AI) bubble or feel like the S&P 500 and Nasdaq-100 have gotten too top-heavy with just a few major tech stocks, owning small-cap stocks could be a good defensive play.

IWM contains thousands of stocks that might become tomorrow’s fastest-growing companies. The ETF’s top holdings by sector include:

  • Industrials (18.3% of the fund)

  • Healthcare (17.4%)

  • Financials (17.1%)

  • Information technology (14.7%)

  • Consumer discretionary (8.3%)

The fund charges an expense ratio of 0.19%, which includes a management fee.

Buying this small-cap ETF can offer you exposure to different parts of the stock market that might be less risky in case of an AI bubble bursting or a bear market in tech stocks. But one big risk of IWM is that it will grow too slowly to make you a millionaire before you retire. Most investors who want long-term growth should buy other diversified ETFs, such as S&P 500 index funds.

Before you buy stock in iShares Trust – iShares Russell 2000 ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and iShares Trust – iShares Russell 2000 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $536,003!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,116,248!*

Now, it’s worth noting Stock Advisor’s total average return is 946% — a market-crushing outperformance compared to 190% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.

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*Stock Advisor returns as of April 10, 2026.

Ben Gran has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Could Investing $10,000 in IWM Make You a Millionaire? was originally published by The Motley Fool

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