The Smartest Way to Build Wealth: Vanguard S&P 500 ETF for Novice Investors

Investors should try to keep their approach as simple as possible.

Congratulations! You've decided that you want to start putting money to work in the stock market. This first step is commendable. However, you're overwhelmed with how complicated everything seems. And you don't know where to start.

There's no reason to worry. Investors who lack experience in the stock market should consider this popular and proven exchange-traded fund (ETF). Let's take a closer look at how you can start building lasting wealth today.

Giving you broad exposure to the market

• Investors need to know about the Vanguard S&P 500 ETF (NYSEMKT: VOO). It follows the most popular index around, the S&P 500, which tracks the stock performance of the 500 largest and most profitable U.S.-based businesses. It's essentially like placing a bet on the long-term growth of the American economy, taking advantage of the innovation that has long characterized this country.
• By buying the Vanguard S&P 500 ETF, you gain broad exposure to every sector of the economy, as well as businesses of all shapes and sizes. I'm sure you're familiar with some of the dominant tech firms that seem to be in the news all the time. With this ETF, you'll own companies like Nvidia and Apple. But the Vanguard S&P 500 ETF also owns much smaller enterprises, such as Henry Schein (dental and medical supplies) and C.H. Robinson Worldwide (logistics).
• It's important to understand how the Vanguard S&P 500 ETF has performed historically. Just in the past decade, it has generated a total return, which includes dividends, of 233%. That translates to a superb yearly gain of 12.8%. This means that had you invested $10,000 in this ETF 10 years ago, you'd be sitting on more than $33,000 today.
• What's really eye-opening is that as a newbie with no experience, if you buy the Vanguard S&P 500 ETF, you will likely be outperforming professionals. Studies have shown that over a 10-year stretch, 90% of large-cap active fund managers lose out to the S&P 500. Investing in this ETF seems like a no-brainer decision.

A winning investment vehicle

While performance is a key factor to consider, there are other variables that you should know about with the Vanguard S&P 500 ETF. And they might just encourage you even more to put money to work.

1. An often-overlooked benefit of investing in this ETF is that it doesn't require financial analysis skills. And investors don't need to spend hours reading annual reports or listening to earnings calls. This frees up time to do the things most important to you.
2. Another plus is that the fund's fees are extremely low. A $10,000 investment in the Vanguard S&P 500 ETF would cost you $3, based on the expense ratio of 0.03%. This means you keep more of your money over time, which is obviously a positive.
3. Perhaps the most obvious benefit of buying the Vanguard S&P 500 ETF is that it can be completely automated. You can adopt a dollar-cost averaging (DCA) strategy, putting money aside every month or quarter. You don't even have to think about it. Plus, you develop a valuable habit of consistently saving and investing.
4. If you're new to the investing world, don't stress. While it can be daunting trying to figure out how to get started, I believe there aren't many better options than the Vanguard S&P 500 ETF. Should you invest $1,000 in Vanguard S&P 500 ETF right now?