Investing in the stock market doesn't have to be complicated. By simply tracking the S&P 500 (^GSPC 1.22%), which is an index of the largest companies in the U.S., you can be confident that your portfolio will rise in value over the long term. While there will be bumps and bad years along the way, the index has continually recovered and grown in value.
There are many exchange-traded funds (ETFs) that track the index, and they can make for solid long-term investments. What's key, however, is to focus on low-cost funds. These types of investments will ensure that fees aren't putting a big dent into your overall returns. One of the best low-cost funds to buy today is the Vanguard S&P 500 ETF (VOO 1.14%).
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Minimizing fees should be a priority for long-term investors
One of the most appealing features of the Vanguard S&P 500 ETF is its efficiency. At 0.03%, it's hard to find a lower expense ratio than what this ETF charges. That means if you were to invest $10,000 into this fund, you'd be incurring fees totaling just $3 per year. As your balance increases, your fees will also rise -- but they will still be fairly minimal.
Over time, fees can add up, and even a single percentage point difference in your portfolio's performance can have a significant impact. Consider if the S&P 500 were to rise by around 10% per year, which is what it has averaged historically, for 30 years. A $50,000 investment would grow to be worth around $872,000. But if your return averaged a percentage point lower, at around 9%, then your investment would be worth approximately $663,000 -- a difference of nearly $210,000.
This is why paying attention to fees is crucial for long-term investors, as ignoring them could result in significantly worse returns.
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The Vanguard fund is a suitable option for any investor
Regardless of what your investing strategy is, the Vanguard S&P 500 ETF can be a great investment to have in your portfolio. It and other S&P 500 index funds can be pillars to build around, as they can provide stability and be places where you invest the bulk of your money. That can then enable you to potentially take on more risk with other investments, should you choose to do so.
Either way, the Vanguard S&P 500 ETF and similar low-cost funds can make for terrific investments to hang on to for the long haul.
