A New Year’s Resolution that Turned $26,200 Into $126,305
Every January, many of you tell me the same thing:
“I want to make sure I have enough money to retire, but I really don’t know anything about investing.”
You’re not alone. I want to show you how you can turn that New Year’s resolution into reality. I want to share the cornerstone of my own investment strategy, both before and after retirement—and it’s simple and effective.
Spoiler alert: it involves the S&P 500.
Don’t worry if you don’t know what the S&P 500 is. I’ll explain it in simple, easy-to-understand terms. You don’t need to spend hours learning about or following individual stocks. In fact, if you are spending hours managing your investments, you’re doing it wrong. One woman told me her husband spends many hours each week managing their investments, and I thought, “Well, that’s not a great way to grow your investments”.
The key is time in the market, not timing the market.
John Bogle, the founder of Vanguard and one of the pioneers of index funds, had a favorite quote for what to do when the stock market drops:
“Don’t just stand there. Do nothing.”
And the S&P 500 isn’t just my personal go-to strategy. Billions of dollars are invested in S&P 500 index funds—more than in any other fund in the world. One of the most famous investors, Warren Buffett’s, Simple Advice For New Investors: Start With An S&P 500 Index Fund. It’s the building block of many of the “millionaires next door.
What Is the S&P 500?
The S&P 500 is simply a list of the 500 largest publicly traded companies in the United States, selected by Standard & Poor’s. Companies like Nvidia, Microsoft, Apple, Google, Amazon, Facebook, and Broadcom make up over 30% of the index. So if you invest in the S&P 500, you’re basically investing in the largest companies in the U.S.
An S&P 500 index fund is designed to match the performance of the S&P 500, not beat it. Every major financial company—Vanguard, Fidelity, etc.—offers an S&P 500 index fund that tracks that same benchmark. So when you hear someone say, “The market was up today,” they’re usually talking about the S&P 500.
Why Are S&P 500 Index Funds So Popular?
Because they work—and they’re hard to mess up.
Instant diversification
With one fund, you own 500 major U.S. companies across technology, healthcare, finance, consumer goods, and more. There’s no need to pick individual stocks.Very low costs
Expense ratios on many S&P 500 index funds are often just 0.02%–0.05%. Over decades low fees matter far more than most people realize (and many financial advisors will admit). Most people don’t understand that expense ratios of 1–2% could eat up almost a third of their gains over time.Strong long-term performance
Historically, the S&P 500 has returned about 9–10% per year over long periods. At the same time, roughly 90% of actively managed funds fail to beat an S&P 500 index fund after fees.Tax-efficient
Low turnover in index funds means fewer taxable distributions in taxable accounts—so lower taxes compared to actively managed funds.
The Best Strategy
The simplest and most effective approach is to put your investing on autopilot:
✅ Setup an S&P 500 index fund such as Vanguard’s S&P 500 (VFIAX) or Fidelity’s S&P 500 (FXAIX) in your 401k or 403b.
✅ Set up automatic contributions every month
✅ Set your dividends to reinvest automatically
✅ Do nothing—don’t freak out and sell when the market dips
✅ Hold it for the long term
A Real-World Example
Let’s say you invested:
💰 $1,000 in 2005 in an S&P 500 index fund
📅 $100 per month for 21 years
Your total contribution would be:
$1,000 + ($100 × 12 × 21) = $26,200
After 21 years, you would have about ≈ $126,305 using S&P 500 total returns through 2025 YTD.
That means you contributed only $26,200 of your own money—but ended up with $126,305.
And if you look at just the last 10 years? $1,000 invested 10 years ago in the S&P 500 would be worth about $3,890 today. That’s almost four times the money you invested.
Wow. That’s how you become an S&P 500 millionaire.
That’s not magic. That’s time + consistency + compounding.
It’s really amazing when you watch how your investments grow over time with consistent investing. When my friend has a rough day at work and can’t wait to retire, I tell her to check her Vanguard S&P 500 account and see how much closer she is to her goal.
One Important Reminder
Like all stock investments, the S&P 500 will go up and down from year to year. In any given year, it can drop 20–30%, but historically, it has always come back—it’s just a matter of when. As long as you don’t need the money when the market is down, you haven’t locked in a loss.
That’s why the S&P 500 isn’t a good place for money you’ll need within five years. But for long-term retirement savings—when you won’t touch the money for many years—the S&P 500 has historically been a great investment
Want to become an educated investor and learn more about the S&P 500?
