ARK Invest has had an incredible run over the past year, and its CEO/CIO Cathie Wood has made headlines for her investing strategies. ARK Invest offers a handful of exchange-traded funds (ETFs) that all focus on innovative companies poised to disrupt their industries. While Wood herself is a divisive figure in the investing world, there's no doubt that ARK's ETFs have experienced phenomenal returns.
Before you invest in any of these ETFs, keep in mind that they're on the riskier side of the spectrum. But sometimes, with more risk comes higher returns. If you're willing to take on higher levels of risk, these ETFs could potentially make you a multimillionaire.
Image source: Getty Images.
1. ARK Innovation ETF (ARKK)
The ARK Innovation ETF (ARKK -2.77%) is the company's flagship ETF. Created in 2014, it typically contains between 35 and 55 holdings. The largest holding in the fund is Tesla, but it also includes stocks such as Teladoc Health, Square, and Roku.
Since the fund's inception, it has earned an average return of around 36% per year. If you were to invest $300 per month in this fund earning a 36% annual rate of return, you'd reach $1 million in around 15 years. After 20 years, you'd have a whopping $4.6 million, all other factors remaining the same.
Of course, the actual rate of return this fund experiences could fluctuate wildly -- that's part of the risk involved in these ETFs. But if the fund continues performing like it has since 2014, you could potentially make a lot of money.
2. Next Generation Internet ETF (ARKW)
The Next Generation Internet ETF (ARKW -2.45%) includes companies in sectors such as e-commerce, cybersecurity, Internet of Things, cloud computing, blockchain, and artificial intelligence. It was also created in 2014, and a few of its largest holdings include Tesla, Grayscale Bitcoin Trust, and Square.
Since 2014, it has earned an average return of around 41% per year. At that rate, if you were to invest $300 per month in this fund, it would take around 14 years to reach $1 million. After 20 years, you'd have an incredible $8.4 million, assuming you continued earning a 41% annual rate of return.
3. Fintech Innovation ETF (ARKF)
The Fintech Innovation ETF (ARKF -1.98%) is one of the newest ARK ETFs, established in early 2019. It contains companies in the fintech industry, including Square, PayPal, Silvergate Capital, and Zillow.
Although this fund doesn't have as long of a track record as the other two funds, it has experienced the highest returns so far. Since 2019, it has earned an average rate of return of more than 62% per year.
If you were to invest $300 per month earning a 62% annual return, you'd have around $1 million within 11 years. After 16 years, you'd have an astounding $13 million in total.
Again, it may be unrealistic to assume you'll be earning a 62% return year after year. But even if this fund only earns, say, a 20% to 30% annual return, that's still much higher than average, and it could still make you a multimillionaire.
Choosing the right investments can be tough, and it's important to understand your risk tolerance. If you're willing to take on more risk for greater potential for reward, these ETFs could put you on the path to becoming a multimillionaire.
