The stock market is a wealth-building powerhouse, and investing consistently is one of the easiest and most effective ways to supercharge your net worth.
Whether you’re a beginner investor or are simply looking for a no-fuss investment that requires minimal effort on your part, the S&P 500 ETF — such as the Vanguard S&P 500 ETF (NYSEMKT: VOO), iShares Core S&P 500 ETF (NYSEMKT: IVV), or SPDR S&P 500 ETF Trust (NYSEMKT: SPY) — is one of the most popular options.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Endorsed by Warren Buffett, who once noted that an S&P 500-tracking fund is “the best thing” for most people, this ETF offers both stability and long-term earning potential. Here’s how it could turn $200 per month into $1 million or more over time.
A powerful fund with a long track record of success
In many ways, it’s tough to go wrong with an S&P 500 ETF. This type of investment tracks the S&P 500 (SNPINDEX: ^GSPC), so owning a single share provides exposure to all 500 companies in the broad market index.
The companies within the S&P 500 are among the largest and strongest in the U.S., and many of them have decades of experience navigating tough economic times — making this investment a particularly strong choice if a bear market or recession is looming.
History also suggests that over the long term, it’s actually harder to lose money with an S&P 500 ETF than to make money.
Analysts at Crestmont Research studied the S&P 500’s rolling 20-year total returns since 1919 and found that every period has ended with positive total returns. That means that by investing in an S&P 500 ETF at any point in history and holding it for 20 years, you’d have come out ahead.
Turning $200 per month into $1 million
While past performance can’t predict future returns, the S&P 500 has earned an average annual return of around 10% over many decades. It’s likely, then, that an S&P 500 ETF will earn somewhat similar returns over time.
If you were to invest $200 per month while earning a 10% average annual return, here’s approximately how much you could accumulate in total:
Data source: author’s calculations via investor.gov.
Keep in mind, too, that while the S&P 500 ETF isn’t necessarily the highest-earning investment, it is a passive fund. In fact, this ETF performs best when left alone for decades. Other than making consistent contributions, this fund requires next to no effort on your part.
