1 Unstoppable Vanguard ETF I Wish I'd Bought 10 Years Ago

I really wish I'd bought shares of the Vanguard S&P 500 ETF (NYSEMKT: VOO) a decade ago. The index fund has delivered an impressive 15.1% annualized total return over the past 10 years. That's a lot better than some of my individual stock picks.

At that return, $10,000 invested in this top ETF would have grown to nearly $41,000 today, assuming dividend reinvestment (over $35,000 without dividend reinvestment). That shows just how powerful an unstoppable compounding machine like the Vanguard S&P 500 ETF can be over the long term. Here's what drove its strong returns, and why buying this ETF is part of my financial plan for the next 10 years.

Image source: Getty Images.

Magnificent returns

The Vanguard S&P 500 ETF holds shares of 500 of the largest U.S. publicly traded companies, weighted by market cap. That means it holds more of the most dominant companies, led by the "Magnificent Seven" stocks. This group of mega-cap tech companies has helped drive the S&P 500's returns over the past 10 years. For example, in 2025, they contributed more than 40% of the S&P 500's total return. Over the last five years, they've delivered a combined return of over 125%, more than double that of the rest of the S&P 500 (59.1%).

Why I passed on the Vanguard S&P 500 ETF

The Vanguard S&P 500 ETF is a passive investment. It aims to deliver returns that match the S&P 500 index. For most people, investing in an index fund like VOO is the way to go if you want to slowly build toward retirement.

However, I've always had grander ambitions. I wanted to earn market-beating returns so that I could retire early. That's why I've primarily invested in individual stocks and passed on buying the Vanguard S&P 500 ETF over the past decade.

For many years, my strategy worked. Up until late last year, my IRA and brokerage account both had beaten the S&P 500 over the past quarter-century. However, my returns have trailed off a little bit in the past year due to a few laggards.

Why I'm planning to shift my strategy a little bit

While beating the S&P 500 had been my north star for many years, I've built my portfolio to the point where simply matching its historical returns from here would produce a more-than-comfortable retirement. That's why I plan to shift a greater portion of my portfolio toward passive funds like VOO over the next decade as I slowly transition to early retirement.

I plan to start trimming more of my lowest-conviction investments and reinvesting the proceeds into passive set-and-forget funds like VOO. I don't even need it to deliver returns at the same level as the past decade or even since its inception in 2010 (14.9%). I'd be more than happy if it delivered a return near the stock market's average since 1928, which is almost 10%.

I wish I'd done this sooner

While I wish I had bought the Vanguard S&P 500 ETF a decade ago instead of some of my lagging holdings, that's a bit of hindsight bias. However, after doing some retirement planning, VOO makes a lot more sense for my situation now than it did a decade ago. That's why I plan to add this unstoppable ETF to my portfolio as I actively work toward securing an early retirement over the next decade or so.

Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.