If You'd Invested $1,000 in the Vanguard S&P 500 ETF (VOO) 10 Years Ago, Here's How Much You'd Have Today
Key Points
The Vanguard S&P 500 ETF is the largest in the world.
Passive indexing gives you access to market gains.
- 10 stocks we like better than Vanguard S&P 500 ETF ›
Investing in "the market" has become a popular way for investors to grow their money over the past few years, and an index fund like the Vanguard S&P 500 ETF (NYSEMKT: VOO) has become the largest vehicle for this type of investing. This exchange-traded fund (ETF) has $1.5 trillion in assets under management, and if you had put money into it 10 years ago, you'd have a solid investment today.
Can you beat the market?
The Vanguard S&P 500 ETF, as its name suggests, tracks the broader index. It's the original passive investing idea, mimicking the index's gains (as well as losses). Over time, the S&P 500 has been a reliable wealth generator. It's also relatively safe, since it invests in stocks representing just about every investment sector, but focuses on large-cap stocks. This tends to mean companies that are doing well.
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It's not easy to beat the market, which means it makes sense to simply invest in it. Investing legend Warren Buffett recommends this for most retail investors, and his holding company, Berkshire Hathaway, owned stock in two index-based ETFs at one point.
The index, on average, gains about 10% annually, which is an excellent return compared with other types of investments. It will lead to long-term gains as it compounds, especially if you add funds consistently. It's also a great choice for those who want to add stability to a larger portfolio.
If you had invested $1,000 in the ETF 10 years ago, your total return would be $3,900 today, meaning you'd have nearly quadrupled your initial investment. And if you were to keep that money in the ETF for the next 10 years and longer, it is very likely to continue to expand and be an important component of your overall investing strategy.
Should you invest $1,000 in Vanguard S&P 500 ETF right now?
Before you buy stock in Vanguard S&P 500 ETF, consider this:
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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
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