What is a S&P Index Fund? Essentially A Index fund is a investment vehicle either mutual fund or exchange traded fund that, invests in the 500 stocks that form the S&P 500 Index. The fund will invest in these 500 companies weighted for markets. This fund is the best way to avoid investment fees. Warren Buffet has said that when he dies he wants his wives investment portfolio to managed in this fashion. Buffet is on the record saying that a S&P Investment fund is the best investment an American can make. It is basically a bet on the American economy and American business which has historically been a good bet. Over the long run a S&P generates total returns of about 10% annualized.
For example if you took $10,000.00 in 1980 and invested it in a S&P Index fund into more than three quarters of a million dollars in less than 4 decades.
Since January 1 of 1980 the S&P Index fund has generated a return of 7,670%. That translates to a 12.1 annualized return.
Accounting for a .01 expense ratio you can find lower rates. This means according to the math a $10,000.00 investment in 1980 would be over $780,000.00 in today’s money.
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