In the recent market turbulence, some of the most popular stocks have been absolutely hammered, with shares down by 50%, 70%, or even 90% or more from their all-time highs in a few cases. With all of the volatility in stocks, many investors have started taking a closer look at simply buying and holding index funds – specifically the S&P 500.

However, is the S&P 500 a good way to build retirement wealth all by itself? In this article, we'll look at the S&P 500's historical returns and what an investment in a simple S&P 500 index fund could do for your retirement portfolio.

A recent history of the S&P 500 and what it means to you

From 1965 through 2021, the S&P 500 delivered 10.5% annualized total returns for investors. In individual years, returns have varied from a low of negative 37% in 2008 to a high of 37.6% in 1995, but over time, the clear direction has been up. That's a 30,209% total return over a 46-year period.

How does performance like this translate into long-term investment returns? Let's take a look at some numbers. We'll say that you invest $500 per month in a low-cost S&P 500 index fund, which we'll discuss in more detail in the next section. Here's how your portfolio could grow over time, based on that 10.5% historic pace of returns.

Time Period

Growth of $500 Monthly Investments

10 Years


15 Years


20 Years


25 Years


30 Years


40 Years


Source: Author's calculations. Returns are based on 10.5% total returns compounded annually and rounded to the nearest dollar.

So, the short answer is yes. It's possible to retire a millionaire, or a multimillionaire, simply by making incremental investments in the S&P 500 over time. For example, over a 30-year period, your $500 monthly investments would add up to $180,000, but the magic of compound gains could produce an ending value of more than $1 million.

To be clear, these figures are based on historical long-term averages. There's no guarantee that the S&P 500 will generate returns in the 9% to 10% range over the next 30 to 40 years, and it's entirely possible that when you reach your desired retirement age, the S&P 500 will be in a bear market. But the long-term figures show how strong of a wealth creation mechanism the S&P 500 has been and how much your wealth could grow by investing in it.

How to invest in the S&P 500

You don't need to buy all 500 companies in the S&P 500 benchmark index to invest. The best way for investors like you and me to invest in the S&P 500 is to buy a mutual fund or exchange-traded fund (ETF) that tracks the index. If you aren't familiar with how these work, both types of investment vehicles pool investors' capital and invest it proportionally in the 500 companies that make up the index.

One excellent example of an ETF is the Vanguard S&P 500 ETF (VOO 0.68%). ETFs directly trade on major stock exchanges, so you'd buy shares of this fund just like you would a stock. The Vanguard fund has a rock-bottom 0.03% expense ratio, so your investment fees are minimal.

S&P 500 ETFs and mutual funds are designed to match the index's performance over time, so these can be a great set-it-and-forget-it way to invest.

Is the S&P 500 the only investment you need to retire a millionaire?

The math is pretty clear. If you start investing at a relatively young age and make consistent investments along the way, it's entirely possible (if not likely) to retire a millionaire with just the S&P 500. As legendary investor Warren Buffett says, "it is not necessary to do extraordinary things to get extraordinary results."

That said, you shouldn't necessarily invest exclusively in the S&P 500. There are other indices, sectors, and groups of stocks you can invest in through mutual funds and ETFs, and there are some excellent individual stocks you can invest in. But a solid, broad-market investment like the S&P 500 can be a great way to start a portfolio and can serve as a solid backbone to your investment strategy for decades to come.