When evaluating the performance of the stock market, investors’ primary focus is generally the S&P 500 (SNPINDEX: ^GSPC) index. This is the ultimate benchmark, comprising around 500 large, profitable U.S. businesses. It’s a good way for investors to gauge the state of the American economy.
In the past decade, the S&P 500 index has generated a phenomenal total return of 327% (as of June 26), which is significantly higher than its long-term annualized average of 10%. Investors observing this trend certainly want to build some exposure.
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Here’s the smartest way to allocate capital to the S&P 500 index right now.
Look to Vanguard
Founded in 1975, Vanguard has a whopping $12 trillion in assets under management (as of November 2025) and offers 458 different funds. Perhaps its most popular product is the Vanguard S&P 500 ETF (NYSEMKT: VOO). This exchange-traded fund (ETF) has $1.7 trillion in assets in total. Clearly, a lot of investors find this to be a worthy choice.
One of the biggest draws is the low cost. The Vanguard S&P 500 ETF charges an expense ratio of 0.03%, which measures the annualized amount investors pay in management fees. On a hypothetical $10,000 investment, Vanguard will collect $3 annually. That’s a tiny amount compared to the sea of expensive investment options that are out there.
The Vanguard S&P 500 ETF provides a tool for average investors to gain instant exposure to all sectors of the economy. It’s a hassle-free approach that doesn’t require the time commitment or research capabilities to pick single stocks. That’s also extremely valuable.
Be bullish about the long term
There are two major concerns the market has about the S&P 500 index. The first comes down to its historically expensive valuation, which data shows predicts subpar returns over the next decade. Moreover, investors might not be comfortable with how concentrated the benchmark has become, as research from The Motley Fool shows that 33% of the S&P 500 is represented by the “Magnificent Seven” stocks.
These are legitimate concerns. But investors shouldn’t let these factors discourage them from putting their capital at risk. It’s smart to remain bullish over the long term.
The stock market usually rewards patient and disciplined investors. On the other hand, it typically punishes those who try to time the tops and bottoms. Take this as a lesson. Buying the Vanguard S&P 500 ETF today, and even dollar-cost averaging more money periodically, is the best course of action to help your future financial self.
