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Where Will the S&P 500 Be in 30 Years? History Offers a Clear Answer for Investors.

The Motley Fool · 23h ago

Key Points

  • Over the last three decades, the S&P 500 index has produced an annualized total return of 10.4%.

  • Investors should ignore bearish commentary and focus solely on the long term.

The easiest and most uncomplicated way for investors to benefit from the stock market is by buying an S&P 500 (SNPINDEX: ^GSPC) exchange-traded fund, such as the Vanguard S&P 500 ETF. This investment vehicle instantly allows you to own a piece of 500 or so large and profitable American businesses. It's a smart way to build wealth.

But where will the S&P 500 index be in 30 years? History offers a clear answer.

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A person sitting at a desk and looking at charts and data on pieces of paper.

Image source: Getty Images.

Over the last three decades, the popular benchmark has generated a total return of 1,830% (as of Sept. 25). On an annual basis, this comes to 10.4%. Investors won't be blown away by that average figure. But given many years and decades, the compounding can add up. The index would've grown a $10,000 investment made in late September 1996 to almost $193,000 today.

Assume that past performance is our guide to the future (though, there is no guarantee). Then the S&P 500 index will be much higher and deliver a similar total return over the next 30 years. The bears will sound smart in the short term, calling out several potential headwinds. However, the long-term track record is undeniable.

The best course of action, therefore, is to worry less about getting in at the perfect time. Rather, start allocating some of your savings into the Vanguard S&P 500 ETF as soon as you can. The payoff should be worth it.

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.