VOO

If I Were Investing My First $1,000 to Start 2024, Here's What I'd Buy

The one thing about hindsight is that it's always 20/20. You'd have difficulty finding someone who doesn't look back at some of their decisions and wish they would've gone another route. Investing is no exception to this, either.

I know there are investments I look back on and wish I made (or didn't make), and I'm sure countless investors would have similar thoughts. But you live, and you learn. However, if I were starting my investing journey in 2024, there's no question where I'd invest my first $1,000: the Vanguard S&P 500 ETF (NYSEMKT: VOO).

One investment, hundreds of companies, minimal thinking required

The stock market has indexes that theoretically group companies by criteria to track their performance. The S&P 500 (SNPINDEX: ^GSPC) is the most popular of these indexes, tracking the largest 500 companies traded on the U.S. stock market. An investment in an S&P 500 exchange-traded fund (ETF) is like an investment in the broader U.S. economy, which is why I'd go with the Vanguard S&P 500 ETF.

Instead of individually investing in top companies like Apple, Tesla, Coca-Cola, and hundreds of other industry-leading companies, I would go the broad route and get exposure to them all with a single investment. You may not get the hypergrowth returns that could come from those companies individually, but you also don't have the risk that comes with individual companies. It's a good balance between the two.

When you're beginning your investing journey, sometimes the fewer choices you have to make or things you have to do, the better. The Vanguard S&P 500 ETF eliminates the need to research individual companies and allows you to take a passive approach. Most importantly, it allows you to get started, which can be the hardest part for investors.

It's hard to argue against the historical results

In 2023, the Vanguard S&P 500 ETF increased around 24%, reversing course from the 19% it lost in 2022.

In the past 10 years, the ETF has averaged close to 12% annual total returns. Past performance doesn't guarantee future performance, but if we assume this trend continues, here's how much a one-time $1,000 investment could grow in different years (not including fees):

Years Invested Investment Total
20 $9,600
25 $17,000
30 $29,900
35 $52,800
40 $93,000

Data source: Author's calculations. Values rounded to the nearest hundred.

The plan would be to make consistent investments, but the above table shows how a single invest-it-and-forget-it investment could pay off by simply letting time work its magic. Below is how much a one-time $1,000 investment and $500 monthly investments could grow to, using the Vanguard S&P 500 ETF's returns over the past decade:

Years Invested Investment Total
20 $442,000
25 $817,000
30 $1.47 million
35 $2.64 million
40 $4.69 million

Data source: Author's calculations. Values rounded to the nearest hundred.

I don't want to harp too much on the specific numbers because those will vary with returns, but the S&P 500 has historically proven that it could be a reliable source for building long-term wealth.

A one-stop shop that's ideal for any investing level

Simplicity doesn't mean inferiority. There's a reason countless actively managed funds by Wall Street experts underperform the S&P 500 each year. Sometimes, it's best not to overthink it and stick with what's historically worked.

The Vanguard S&P 500 ETF is diverse, contains blue chip stocks, is low cost, and has stood the test of time. There's not much more I would ask for in an investment.

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Stefon Walters has positions in Apple and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Apple, Tesla, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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