Index-based exchange-traded funds (ETFs) are some of the most popular investment vehicles on Wall Street. The State Street SPDR S&P 500 ETF (SPY -0.23%), the iShares Core S&P 500 ETF (IVV -0.23%), and the Vanguard S&P 500 ETF (VOO -0.21%) are the three largest ETFs in the world. The latter can claim more than $1 trillion in assets under management.

Part of the reason these ETFs have become so popular is the S&P 500‘s (^GSPC -0.25%) long-term performance and its exposure to the economy’s largest and most successful companies.

Over the past decade, the S&P 500 has been driven higher by the “Magnificent Seven” stocks, which have included some of the earliest and most successful names from the artificial intelligence (AI) trade. Since then, investors have been rewarded handsomely for simply buying and holding one of these funds.

A digital board displaying investment returns.

Source: Getty Images.

In the past 10 years, the Vanguard S&P 500 ETF has returned an average of 15.4%. At that rate, a $1,000 investment would have grown to approximately $4,191 assuming that dividends were reinvested and no additional investments were made.

But capturing that investment growth would have required holding the fund for the entire 10 years. In other words, no market timing, no selling when stock prices decline, and no frequent trading. Just traditional buy-and-hold.

Vanguard S&P 500 ETF Stock Quote

Today’s Change

(-0.21%) $-1.51

Current Price

$707.24

Usually, that’s the best way to capture long-term performance gains. People who trade frequently often sell after stocks have declined and only get back in after they’ve at least partially recovered. That kind of behavior usually results in investor returns lagging behind fund returns.

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But for those willing to ride out the volatility, the Vanguard S&P 500 ETF has proven to be one of the best ways for everyday investors to build long-term wealth.

David Dierking 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.


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Shin John
Shin JohnYtv Market News
Share-market news writer and analyst with deep experience covering equities, commodities, forex, and cryptocurrencies for readers in the USA, UK, Canada, and Australia. Ytv Market News delivers timely market updates, practical trading insights, and clear explanations of macro and company-level catalysts that move prices. Combines on-the-ground financial reporting with technical analysis, using concise charts and actionable ideas to help investors and traders make smarter decisions.