One of my biggest pet peeves is seeing new investors start with a few thousand dollars, get discouraged, and then take wild gambles on penny stocks, altcoins, or speculative fads. More often than not, they lose it all.
You don’t need to swing for the fences to build wealth. Buying shares of profitable, cash-generating companies and sitting on them works. It’s not complicated, and you don’t even need to pick single stocks yourself. Index funds handle all the heavy lifting and, over time, are extremely hard to beat.
The S&P 500 Advantage
The S&P 500 Index tracks 500 of the largest publicly traded companies in the United States. It’s market-cap weighted, meaning the biggest companies make up the largest portion of the index, while smaller ones have less influence.
This structure is “self-cleaning” as underperformers naturally shrink in weight or drop out entirely, while winners rise to the top. The index is rebalanced quarterly, so it always reflects the current market leaders.
Over decades, beating the S&P 500 consistently has proven incredibly difficult. Most professional managers fail to outperform it after fees. That’s because it represents a diversified slice of the U.S. economy across multiple sectors, making it both resilient and positioned for long-term growth.
How to Invest
In Canada, the simplest way to buy the S&P 500 is through Vanguard S&P 500 Index ETF (TSX:VFV). This ETF holds all 500 stocks in the index and charges a management expense ratio of just 0.09%.
From January 29, 1993, to August 13, 2025, while VFV itself didn’t exist for that entire period, similar S&P 500 index funds turned a $10,000 investment into $264,653.77 before taxes, assuming all dividends were reinvested. That’s a compound annual growth rate of 10.59% and a cumulative return of 2,546.54%.
The Foolish takeaway
You don’t need to overthink it. Start with what you have, invest regularly into a broad-market ETF like VFV, reinvest your dividends, and let time do the rest. Decades down the road, the impact of consistent investing will dwarf the short-term ups and downs that can feel so important in the moment.
And once you’ve built this disciplined habit, those risky “get-rich-quick” opportunities, whether they’re penny stocks, altcoins, or hot tips from a friend, start to look far less appealing.
At its core, investing success isn’t about predicting the next big stock. It’s about having a simple, repeatable plan, sticking to it through market highs and lows, and letting time work for you. VFV makes that process almost effortless, and for long-term investors, that’s exactly what you want.
