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For beginners, investing in the stock market seems very intimidating. This activity can easily be made way more complicated than it needs to be. However, even the simplest strategies can yield tremendous results in the long term.
It’s time to learn about an underrated investment that has built more wealth than you might realize. And history says that now is a smart time to buy.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again.In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia.Continue »
Listen to Warren Buffett
During the past decade, the S&P 500 index has generated a total return of 323% (as of Sept. 14). If you invested $10,000 in a related exchange-traded fund (ETF), like the Vanguard S&P 500 ETF (NYSEMKT: VOO), then you’d have more than $42,000 today. On an annualized basis, the average total return of 15% is spectacular.
Most investors might not realize that what looks like a boring ETF could be such a lucrative portfolio addition. However, Warren Buffett, viewed by many as the greatest investor ever, has long understood the power of keeping things as simple as possible.
In Berkshire Hathaway‘s 1993 shareholder letter, the Oracle of Omaha suggested that the “know-nothing investor” should buy an index fund to own a large group of businesses representative of the U.S. economy.
In the 2013 letter, Buffett wrote that he has instructions for after his death that 90% of his cash be invested in “a very low-cost S&P 500 index fund.” He said, “My advice to the trustee could not be more simple.”
That advice has proven to be extremely valuable. Buffett famously made a bet in late 2007 that a group of hedge funds could not outperform the S&P 500 index over a 10-year period starting in 2008. After nine years, the benchmark’s total return was significantly higher than that of the so-called expert capital allocators. The professional money managers all came up alarmingly short.
This shows just how powerful owning something like the Vanguard S&P 500 ETF can be. It’s a hassle-free approach to gaining market exposure. And the results speak for themselves.
It’s always a good time to invest
The stock market is currently not too far off its record high. So, you might wonder why now is a good time to invest. It all comes down to having the right mindset. When you’re a long-term investor with decades of compounding ahead, the timing of when you invest doesn’t really matter. What actually has the most impact is that you start putting money to work early and often.
