Investing in the stock market doesn't always mean finding single stocks to put money in. While identifying winning companies can be financially rewarding, investors can do just fine by buying exchange-traded funds (ETFs). One that tracks the S&P 500, like the SPDR S&P 500 ETF Trust (SPY -0.37%), has worked out extremely well.
If you'd put $1,000 in this popular ETF exactly 10 years ago, here's how much you'd have today.
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Compounding investor capital
Since early September 2015, the SPDR S&P 500 ETF Trust has generated a total return of 291% (as of Sept. 4). So, a $1,000 initial investment would be worth $3,909 today. This translates to an annualized gain of 14.6%. That's an outcome that's hard to complain about.
To achieve this return, investors didn't need to have any special skills, such as financial modeling or business analysis. Plus, there was no need to spend countless hours listening to earnings calls or poring over Securities and Exchange Commission (SEC) filings. It's a passive strategy that has worked out well.
Investing near record highs
The SPDR S&P 500 ETF Trust currently trades near its record high. Prudent investors are right to wonder if now is a good time to put money to work. After all, wouldn't it be better to wait for a pullback?
That line of thinking certainly is understandable. However, timing the market correctly is an impossible task. More harm can be done to portfolios by trading in and out of positions unnecessarily. It's best to invest early and often, having time work to your advantage. The SPDR S&P 500 ETF Trust might not put up the same return going forward that it did in the past decade, but it will still work out well for patient investors.
