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It doesn't take a lot of money in order to start building wealth in the stock market. If you invest just $1,000 in the Vanguard S&P 500 ETF ( VOO -0.23% ) today, it may not seem like it'll amount to much, even after several years. In reality, there's a clear path to tens of thousands of dollars if you leave it invested long enough and let it grow over time.
Since its inception in September 2010, the Vanguard S&P 500 ETF has returned around 15% per year. If you had invested $1,000 when the fund launched and held it for the past 16 years, your investment would be worth roughly $9,400. That's well above the index's long-term 10% average annual return, so investors probably shouldn't expect to earn 15% yearly for the next three decades.
Image source: Getty Images. But let's do the math anyway. If that same $1,000 investment were to earn 15% annually over the course of 30 years, the balance would grow to $66,200, a 65x return on investment, all thanks to the power of compounding.
That return, however, should be considered a best-case scenario and is very unlikely to happen over the next three decades. A better benchmark would be to assume the S&P 500 's ( ^GSPC -0.25% ) long-term rate of return of roughly 10% annually. In that scenario, a $1,000 investment bought and held for 30 years at 10% per year would end up with an ending balance of around $17,400.
That's an incredible return, even with more modest return expectations. Better yet, it requires no real work. Simply make your investment and watch it grow over time.
Long-term buy-and-hold investing remains one of the best strategies for building wealth over time. David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF.
The Motley Fool has a disclosure policy .
Source: The Motley Fool
