The stock market is one of the best tools people have at their disposal to build long-term wealth. Many investors find it appealing to pick individual stocks. Choosing the right company can lead to huge returns.
However, it's hard to deny the effectiveness of buying a simple Vanguard exchange-traded fund (ETF), like the Vanguard S&P 500 ETF (VOO +0.61%), and holding it for 30 years.
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The S&P 500 (^GSPC +0.59%) comprises approximately 500 large, profitable American businesses. By owning the Vanguard S&P 500 ETF, investors instantly own a significant chunk of the U.S. economy. History says betting on leading domestic companies has been a fruitful endeavor.
Over the past 30 years, the popular benchmark has generated an annualized total return of more than 10.3%. Assuming this performance holds over the next three decades, a $10,000 starting amount would be worth $192,000 in 2056.
NYSEMKT: VOO
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Investors can choose to dollar-cost average every month, adding new money regularly. This automated approach builds a valuable habit of consistent investing.
An underappreciated point is that investors don't need special analytical skills. And buying and holding the Vanguard S&P 500 ETF requires no time commitment. It's a hassle-free way to gain exposure to the stock market.
