This Is the 1 Investing Move That History Says Has Never Once Failed Long-Term Investors

In the past few years, the U.S. stock market has been booming, despite some tumultuous ups and downs. We had the pandemic stock market crash and then a powerful rally in 2020-2021. The S&P 500 (SNPINDEX: ^GSPC) went down by about 18% in 2022 as interest rates rose. And as of this writing, during the week of Aug. 4, the artificial intelligence (AI) boom helped drive the S&P 500 to all-time highs.

But many investors are nervous. The Iran conflict, higher energy costs, and inflation might not go away. Interest rates might go higher. The good times might come to an end. The AI stock boom might turn to a bust.

How should people invest if they worry that today's stock market is overvalued and share prices are too good to last? No one knows for sure what the future holds with investing. But most people with a long-term time horizon should make one simple investing move right now: Use dollar-cost averaging to keep buying a diversified portfolio of stocks, such as the State Street SPDR Portfolio S&P 500 ETF (NYSEMKT: SPYM).

Buying this fund or another low-cost S&P 500 ETF with the same amount of money every month and holding those investments for the long term is likely to be a successful strategy. Let's explore why.

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Stocks tend to win in the long run

Here's a big lesson from stock market history: In the past 98 years since 1928, the S&P 500 has delivered an average annual return of about 10%. That average return includes periods of massive turmoil and economic disasters such as the Great Depression, World War II, the dot-com bubble, the global financial crisis, and the short-term volatility we saw in 2020 and 2022. But even with all those downturns, the stock market kept growing and has been a big winner for long-term investors.

Now let's see how your money could grow by investing in the State Street SPDR Portfolio S&P 500 ETF.

SPDR Portfolio S&P 500 ETF (SPYM): 505 stocks, 11.26% annualized returns for 20 years

The State Street SPDR Portfolio S&P 500 ETF is like the best S&P 500 ETFs, but it has a slightly lower expense ratio than most (0.02%). It holds the same stocks: 505 holdings that represent all 500 of the largest publicly traded companies in America. In the past five years, this fund (which tracks the performance of the S&P 500) has delivered average annual returns of 12.83%.

The past 10 years have been even better for investors in the S&P 500. This ETF has delivered an average annual return of 15.07% over the past 10 years. And over the past 20 years, since its inception in November 2005, this ETF has delivered an annualized return of 11.26%. During all these relatively recent time frames, the S&P 500 has outperformed its long-term average.

How $300 a month (or $500 a month) can grow with SPYM

What if you could invest $300 per month into the State Street SPDR Portfolio S&P 500 ETF? Let's assume you keep putting in the same amount every month, buying the same $300 worth of ETF shares and holding them for the long term. And although past performance does not guarantee future returns, let's assume this ETF continues to deliver the same 11.26% average annual return it has earned since November 2005.

After 10 years, you'd have $60,958. After 20 years, you'd have $238,141. And after 30 years, your investment would grow to $753,148.

What if you could bump up your investment to $500 per month? Assuming SPYM delivers that same 11.26% average annual return, here's how $500 per month of dollar-cost averaging in SPYM would grow: After 10 years, you'd have $101,597. After 20 years, you'd have $396,902. And after 30 years, your investment would reach $1.255 million.

If you're a long-term investor, the S&P 500 tends to overcome short-term challenges and pays off in the long run. The State Street SPDR Portfolio S&P 500 ETF gives you easy access to this winning investment strategy at an ultra-low cost.

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.