If You'd Invested $1,000 in the Vanguard S&P 500 ETF (VOO) 10 Years Ago, Here's How Much You'd Have Today
Key Points
The Vanguard S&P 500 ETF grew investor capital more than fourfold over the last 10 years.
The most successful investors focus intensely on staying patient, with an eye toward the long term.
Buying an S&P 500 exchange-traded fund (ETF) is one of the best ways for average investors to gain exposure to the stock market. Even Warren Buffett touts its ability to build long-term wealth.
Along the same vein, the Vanguard S&P 500 ETF (NYSEMKT: VOO) is an excellent choice. And its returns have been impressive. If you'd invested $1,000 in this product 10 years ago, here's how much you'd have today.
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Over the previous decade, the Vanguard S&P 500 ETF has generated a total return of 318% (as of Sept. 25). This would've turned a starting $1,000 sum into nearly $4,200 today. On an annualized basis, the 15% gain is light years ahead of its historical 10% average.
Corporate earnings growth has been a powerful catalyst, as has valuation expansion. The S&P 500 index trades at a cyclically adjusted price-to-earnings (P/E) ratio of 41, 55% higher than 10 years ago. This could be the result of greater capital flooding the equity market, boosted by passive investment flows.
Historically low interest rates for much of the decade also helped. And the rise of the tech sector has driven sizable growth.
No one knows what the next 10 years will bring. But Investors should stay bullish while adopting a long-term mindset. The stock market rewards those who are patient.
Neil Patel has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.