Exchange-traded funds are extremely popular with private investors looking to grow their wealth. Today I wonder if I can achieve my financial goals with just one lens covering the global stock market.

What is a global ETF?

As it seems to be, this kind of ETFs invests in a broad basket of stocks around the world. Some suppliers will only include companies from developed countries. Others will present those of emerging economies.

Either way, this is all done passively. There is no (expensive) human fund manager making decisions in the background.

Things I like

There are several reasons why I think a one-stop global fund like this could be a great choice for me.

First, it gives instant exposure to a very large number of listed companies. In theory, this diversification perfectly eliminates the risk of being wiped out that comes with individual stocks.

Second, the passive approach keeps fees low compared to most actively managed funds. This could save me thousands of dollars over many years.

Of course, no fund (or stock) rises in a straight line. Future returns will also not necessarily match those of the past. But several studies show that stocks have consistently outperformed all other asset classes over the decades. And it is this period which concerns us most at Fool UK.

But there are problems…

By its very nature, no ETF can beat what it tracks. This could mean it will take me longer to become a millionaire than if I managed a more concentrated portfolio.

Let’s use an American chipmaker Nvidia (LSE: NASDAQ) as an example.

Over the past five years, this tech titan has soared nearly 2,700% in value and made some savvy (and very risk-tolerant) investors rich. Needless to say, this type of performance absolutely demolished a global ETF, even one that would have had some exposure to this company.

But hindsight is a wonderful thing. In a parallel world, I could have backed another growth stock exposed to the AI ​​revolution and lost all my money.

In addition, the weight of expectations towards Nvidia continues to grow. Yes, companies have been snapping up its graphics processing units (GPUs) like lightning. But this is now reflected in the frothy valuation. What happens when those customers have everything they need at the moment or a competitor tries to steal their lunch? Even the outcome of the upcoming US elections could cause some volatility.

Another thing to note is that approximately 60% of a global ETF will be invested in the United States. This is to be expected: it is the largest economy in the world. But it could impact my returns if Uncle Sam starts to struggle.

One and done?

Given my own situation, I know which of these two approaches is right for me. And the simple answer is: both!

Much of my wealth is now invested in global ETFs. In time, I hope this will allow me to retire as a millionaire. But we are talking about decades here. Patience is absolutely necessary.

However, I still have a happy bunch of individual company stocks that I hope will outperform. It may or may not get me to my goal sooner.

But the fact is that I will enjoy the process (and the dividends) as much as the result.