🚀 Why the Vanguard S&P 500 ETF Could Be Your Ticket to Financial Freedom (2025 Edition)

Wall Street's worst-kept secret just got a turbocharge.

The S&P 500's sleeping giant

Forget meme stocks and crypto hype cycles—the real wealth machine keeps chugging along. Vanguard's flagship ETF gives you front-row seats to the greatest wealth-creation engine in history.

Compounding doesn't care about your feelings

While traders chase 100x moonshots, the S&P's 10% average annual returns quietly turn $10k into $67k in 20 years. No leverage, no sleepless nights.

The ultimate 'set it and forget it' play

Automatic reinvestment. Dollar-cost averaging. Tax efficiency. Everything Wall Street sells as 'innovative' has been baked into index funds for decades.

Warning: May cause boredom

This strategy won't impress your finfluencer friends. But when their altcoin portfolios crash (again), you'll be the one sleeping like a baby.

*Bonus jab: Hedge funds hate this one simple trick*

Image source: Getty Images.

1. It's diversified across the U.S. economy

This fund tracks theindex, giving you exposure to the economy through 500 of the largest publicly traded companies in the U.S. That means your investment is diversified across technology, energy, industrials, healthcare, commercial goods, and other sectors.

As long as the U.S. economy is doing generally well, then there's a good chance the Vanguard S&P 500 ETF is growing right along with it. This saves you the trouble of having to sift through the latest trends and decipher if they're legitimate or track earnings reports to ensure a company is meeting its financial goals.

2. It has a long track record of success

There's no guarantee with any investment, even the Vanguard S&P 500 ETF, and just because the fund has done well in the past doesn't mean it'll do well in the future. Still, the historic gains of the fund are a good indicator of how well the fund tracks the growth of many publicly traded companies.

Since 1957, the S&P 500 has had a historic annual return of about 10%, not adjusting for inflation. If that trend continues, here's how much an initial $10,000 investment could turn into over the coming decades:

Source: Author's calculations.

While your retirement timeline, monthly contributions, and initial investment will likely vary from this example, you can see that just a modest sum invested over time can build into a substantial portfolio size, thanks to compounding interest.

3. You can't beat its low fees

Buying some funds can be a costly endeavor, but not with Vanguard. The company generally charges some of the lowest fees among investment funds, and the Vanguard S&P 500 ETF charges an especially low expense ratio of just 0.03%.

This means that for every $10,000 you have invested in the fund, you'll pay an annual fee of just $3. That's an incredibly low expense and allows you to keep more of the gains the fund makes over decades.

4. You can avoid the temptation to time the market

One of the biggest temptations of investing in individual stocks is to time the market. While there's nothing wrong with riding a new trend, the problem is that many investors jump in and out of the market based on their emotions about the economy -- and that can decimate your returns.

A 2022 study found that $10,000 invested in an S&P 500 index between 1980 and 2022 WOULD have turned into $1.1 million. But if an investor missed just five days of the highest returns over those 40 years, they would have cut their returns down to about $670,000.

So if your crystal ball is a little cloudy these days, just buy the Vanguard S&P 500 ETF, stay invested for many years, and, potentially, come out much further ahead than if you timed the market.