The stock market has been booming lately, with the S&P 500 and Nasdaq up 14% and 30%, respectively, since the beginning of the year.
Although there are still concerns surrounding a potential recession, now can be a fantastic time to consider investing. Many stocks are still priced well below their peaks, and by investing now, you can snag quality stocks at a discount and set yourself up for substantial long-term returns.
If you're a risk-averse investor looking to make the most of your money, there's one Vanguard ETF that's nearly guaranteed to keep your savings safe. Even better, it could triple your investment in just over a decade with next to no effort on your part.
Invest in the right places
If you're looking for a low-maintenance investment that can also help you earn a substantial amount of money over time, the Vanguard S&P 500 ETF (VOO +0.03%) may be a smart option.
This ETF tracks the S&P 500, meaning it includes the same stocks as the index itself and aims to mirror its long-term performance. The S&P 500 contains stocks from 500 of the largest and strongest companies in the U.S., including household names like Amazon, Apple, and Microsoft.
A few other advantages of this ETF include:
- Easy diversification: By investing in just one ETF, you'll own a stake in 500 companies from multiple industries. This provides immediate diversification, and it can help protect your portfolio against volatility. Even if a few stocks take a turn for the worse, the vast majority will survive.
- A long track record of positive returns: The S&P 500 itself has a decades-long history of recovering from bear markets, recessions, and everything in between. While there are never any guarantees when investing, it's extremely likely it will rebound from any future downturns as well.
- Low fees: The Vanguard S&P 500 ETF, specifically, has a rock-bottom expense ratio of just 0.03%. This is far lower than many other ETFs, and it could save you thousands of dollars in fees over time.
Perhaps the best part of this ETF, however, is that it requires next to no effort on your part. You never need to research companies or decide which individual stocks to buy. Simply invest whatever you can afford, then let the fund do all the heavy lifting.
Triple your money while barely lifting a finger
Compound earnings can help your savings grow exponentially over time. By investing now and simply letting your money sit for a few years or decades, you could earn more than you might think.
Historically, the S&P 500 itself has earned an average annual return of around 10% per year. While it's incredibly unlikely you'll see 10% returns every single year, the annual ups and downs should average out to around 10% per year over the long haul.
NYSEMKT: VOO
Key Data Points
If you were to invest in the Vanguard S&P 500 ETF today while earning a 10% average annual return, you'd more than triple your money within 12 years -- even if you made no additional investments in that time.
To really supercharge your savings, however, you can continue investing a little each month. For example, say you invest $1,000 now, but you also invest $100 per month while earning a 10% average annual return. Here's approximately how much you could accumulate over time:
| Number of Years | Total Savings |
|---|---|
| 12 | $29,000 |
| 15 | $42,000 |
| 20 | $75,000 |
| 25 | $129,000 |
| 30 | $215,000 |
| 35 | $353,000 |
Data source: Author's calculations via Investor.gov
While it can take decades to see substantial growth, investing in the stock market is one of the easiest, safest, and most effective ways to build wealth. And thanks to compound earnings, getting started investing early can dramatically increase your savings over time.
There's no single correct way to invest, and the Vanguard S&P 500 ETF won't be right for every portfolio. But if you're looking for a low-risk, low-maintenance investment that can help you make a lot of money with minimal effort, it could be a smart option.
