Core Insights - The Vanguard S&P 500 ETF is highlighted as a simple and effective core holding for investors, especially for those new to investing [1] - Despite the risks associated with individual stocks, the S&P 500 index has shown strong performance, generating an average annual return of 14.6% over the past decade [3][4] - The S&P 500's success is attributed to its market capitalization weighting, allowing larger companies to have a greater impact on the index's performance [4][5] Market Statistics - A J.P. Morgan study indicates that over 40% of stocks in the Russell 3000 index experienced catastrophic price losses, defined as a 70% decline from which they never fully recovered [2] - Approximately 40% of stocks in the Russell 3000 had negative returns, and about two-thirds underperformed the index [2] - Only 14% of actively managed funds have outperformed the S&P 500 over the past decade, highlighting the challenges faced by professional investors [6] Investment Strategy - Investing in index ETFs like the Vanguard S&P 500 ETF is recommended as a low-cost strategy, with an expense ratio of just 0.03% [9] - The performance of the Vanguard ETF closely mirrors that of the S&P 500, with a difference of only 0.04% after expenses [9] - Dollar-cost averaging is suggested as a long-term investment strategy, allowing investors to build wealth over time [10][12] Long-term Growth Potential - An example illustrates that starting with $1,000 and investing an additional $500 monthly for 30 years could result in a portfolio exceeding $1.5 million, assuming a 12% average annual return [11] - If the investment period extends to 40 years, the portfolio could grow to over $4.9 million, with 95% of that amount coming from gains [11]