Key Points
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The S&P 500 has historically registered an annualized total return of about 10%.
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If the past is any guide, investors who buy the Vanguard S&P 500 ETF should do this well.
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If you buy and hold for 20 years, your money will grow by nearly sevenfold.
There are many ways to gain access to the stock market. Investors can buy individual securities. But another popular method is to add an exchange-traded fund (ETF) to your portfolio.
When it comes to the latter strategy, the Vanguard S&P 500 ETF(NYSEMKT: VOO) is a top choice. It provides instant exposure to the S&P 500(SNPINDEX: ^GSPC).
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Where will this ETF be in 20 years? Here’s what decades of stock market history suggest.
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Since 1957, the S&P 500 has produced an annualized total return of about 10%. There have been numerous adverse events that the market has overcome, resulting in occasional sizable drawdowns. But the long-term trend is undeniable.
Assuming this level of performance continues far into the future, the Vanguard S&P 500 ETF will generate a cumulative total return of 573% over the next two decades. Those who buy $10,000 of this investment vehicle today will see their initial capital grow to $67,275 by August 2046.
This is how compounding works. In any single year, the returns don’t appear all that impressive. It might even be hard to notice, as day-to-day volatility can mask durable gains.
However, the results add up over time. Investors who are patient and disciplined will find that the stock market is arguably the best tool for building lasting wealth. The data on past performance paints a clear picture.
Should you buy stock in Vanguard S&P 500 ETF right now?
Before you buy stock in Vanguard S&P 500 ETF, consider this:
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Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $421,943!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,382,819!*
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Neil Patel has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.