If You'd Invested $150 Weekly in the S&P 500 Since 1993, Here's How Much You'd Have Today

The S&P 500 (SNPINDEX: ^GSPC) tracks the performance of 500 large-cap American businesses. Its constituents span all 11 market sectors and the index covers about 80% of the total market capitalization of the U.S. stock market.

That scope and diversity make the S&P 500 an excellent benchmark for the broader U.S. economy, which itself is the largest and (arguably) the most innovative economy on the planet. Indeed, 15 of the 20 largest companies in the world were created in the U.S., and JPMorgan Chase CEO Jamie Dimon has called America the "most prosperous economy the world has ever seen."

The S&P 500 has been a consistent moneymaker since its inception in 1957. The index has never failed to produce a profit over any rolling 20-year period, and it returned 1,680% over the last three decades, which is equivalent to 10.06% per year. That means $150 invested weekly since 1993 would be worth $1.3 million today. And that sum would grow into $3.5 million by 2033, assuming the pace of investment and rate of return remain constant.

Here's why investing in the S&P 500 is still a smart move.

Three ways to invest in the S&P 500

The Vanguard S&P 500 ETF (VOO 1.00%) is one of several good S&P 500 index funds. It is nearly identical to BlackRock's iShares Core S&P 500 ETF (IVV 0.98%), but slightly cheaper than State Street's SPDR S&P 500 ETF Trust (SPY 0.95%).

The table below details the number of holdings and the expense ratio of all three index funds.

Data sources: Vanguard, BlackRock, and State Street.

Slight differences notwithstanding, there are three reasons most investors would do well to consistently buy one of the above index funds.

First, the S&P 500 incorporates value stocks and growth stocks from every market sector, and it offers exposure to hundreds of blue chip businesses. In other words, investors can build a portfolio of high-quality stocks (without doing much work) by simply buying an S&P 500 index fund.

Second, all three index funds have below-average expense ratios, meaning investors get diversity across hundreds of quality stocks without paying exorbitant fees to professional money managers. Better yet, less than 7% of large-cap funds beat the S&P 500 over the last 15 years, meaning most money managers charge more and perform worse.

Third, the S&P 500 has consistently created wealth for patient investors. The index not only produced a profit over every rolling 20-year period since its inception, but it also soared 1,680% over the last three decades despite facing three recessions and four bear markets. Nothing is guaranteed where stocks are concerned, but an S&P 500 index fund as close to a sure thing as investors are likely to find.

Invest small sums of money on a regular basis

It makes sense to regularly invest small sums of money in an S&P 500 index fund. That strategy is called dollar-cost averaging, and it keeps investors from falling prey to the perils of market timing. It also makes sense to hold the fund for at least five years, though longer holding periods increase the odds of profitability and allow more time for compounding to work its magic.

As mentioned above, the S&P 500 returned a total of 10.06% per year over the last three decades. The chart below uses that rate of return to illustrate how different weekly contribution amounts would grow over different time periods.

Table by author. Note: Dollar values assume an annualized rate of return of 10.06%.

For readers that skipped to the end, here is the entire article condensed into a single sentence: Patient investors can build a multimillion-dollar portfolio by consistently buying an S&P 500 index fund.