Over the past few years, investing in “the market” has become a popular way for investors to grow their money, and things like pioneer S&P 500 ETF (NYSE: VOO) has become the largest vehicle for this type of investment. This exchange-traded fund (ETF) has $1.5 trillion in assets under management, and if you put your money in it 10 years ago, you’d have a solid investment today.
The Vanguard S&P 500 ETF, as the name suggests, tracks a broader index. This is the original passive investing philosophy, mimicking the gains (and losses) of an index. The S&P 500 has been a reliable wealth creator over time. It’s also relatively safe because it invests in stocks from nearly every investment universe, but focuses on large-cap stocks. This tends to mean companies that are performing well.
Beating the market isn’t easy, which means it makes sense to simply invest in the market. Investing legend Warren Buffett recommends this to most retail investors and their holding companies, Berkshire Hathawayat one point held shares in two index-based ETFs.
The index has risen about 10% per year on average, which is an excellent return compared to other types of investments. When it compounds, it can lead to long-term gains, especially if you continue to grow your money. It’s also a good option for those who want to add stability to a larger portfolio.
If you invested $1,000 in an ETF 10 years ago, your total return today would be $3,900, which means your initial investment would be almost four times the original investment. If you keep that money in an ETF for the next 10 years or more, it’s likely that it will continue to expand and become an important part of your overall investment strategy.
Before buying shares of the Vanguard S&P 500 ETF, consider the following factors:
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