Got $500 to Buy Stocks? Use this ETF.

You can invest $500 on one stock. Better yet, acquire an exchange-traded fund (ETF) that lets you invest in hundreds or thousands of equities in one purchase. One of the most trustworthy investments on Earth, the Vanguard S&P 500 ETF (NYSEMKT: VOO) features low costs. Learn how a $500 investment in this top S&P 500 index fund could boost your wealth.

VOO tracks the S&P 500 index, 500 of the largest and most successful publicly traded U.S. firms. The fund's top five holdings:

1. MSFT (NASDAQ) 2. Apple (AAPL) 3. Nvidia (NVDA) 4. Amazon (NASDAQ: AMZN) 5. Meta Platforms Class "A" (NASDAQ: META)

This product, like all index-tracking funds, aims to match the index. If the S&P 500 index returned 20%, the VOO should do the same, sans fees. The VOO's returns are practically equal to the S&P 500 index since its ETF expense ratio is an ultra-low 0.03%, meaning only $3 of a $1,000 investment goes to fees.

How $500 becomes $1 million If you invest $500 and budget $500 per month, your investment may reach $1 million after 30 years. The S&P 500 has averaged 10% yearly returns. Some years have negative index returns, while others have great returns. Even after protracted downturns, the S&P 500 index has a great track record of recovery.

A $500 monthly investment with 10% average yearly returns may grow like this. VOO investment won't make you a rich overnight. Due to compounding, long-term investments that generate market returns can build significant wealth.

Even in a bear market, when you may be tempted to sell, you must maintain the course. Dollar-cost averaging—investing a predetermined amount on time regardless of market performance—works well for most investors. Investing $500 in the VOO each month is dollar-cost averaging.

Buy Vanguard's S&P 500 ETF shares in a Roth IRA to boost returns. Following the regulations will make retirement withdrawals tax-free, but you won't gain an upfront tax savings. With such compound earnings, investing in the VOO through your Roth IRA might lead to significant tax-free wealth.

Stay turned for development