Investors are being told that starting to invest sooner is better, with advice not to worry about finding the perfect moment to begin. The Vanguard S&P 500 ETF is highlighted as a strong core holding for those starting now.
An old saying notes the first step is hardest, which many find true for investing. People often seek the best time to invest, fearing losses if they buy at a market peak, especially with stocks near all-time highs and overvaluation talk.
However, ideal investment timing is rare. While investing after a dip and before a rally is possible, it's uncommon even for experienced investors. Bull markets tend to last long, and a J.P. Morgan study found the S&P 500 hits all-time highs on about 7% of trading days, with a third of those never trading lower.
Concerns about overvaluation may be misplaced, as many metrics used are backward-looking. Currently, artificial intelligence is driving rapid growth in one of the biggest technological shifts.
Based on 2026 earnings estimates, large companies like Nvidia, Alphabet, and Amazon appear attractively valued given their growth rates. The market has shifted, with tech stocks now a larger percentage compared to past dominance by low-growth financials and cyclical industrials, justifying higher valuations.
History shows starting investing earlier leads to better outcomes due to compounding gains. Five hundred dollars is a good starting point, but consistent monthly investments of that amount through dollar-cost averaging can build long-term wealth and reduce timing worries by smoothing returns.
For a starting investment, an exchange-traded fund like the Vanguard S&P 500 ETF is recommended. This low-cost fund, with a 0.03% expense ratio, tracks the S&P 500 index, which includes the 500 largest U.S. publicly traded companies and is seen as a U.S. stock market barometer.
The S&P 500 is market cap weighted, meaning larger companies have greater index percentages. This approach has made the index hard to beat, with only about 14% of actively managed funds outperforming it over the past decade.
The Vanguard S&P 500 ETF has performed well, averaging nearly 14.8% annual returns over the past ten years and nearly 23% yearly gains the past three years. Investing $500 monthly at a 15% annual return over 30 years could yield around $2.8 million.
Before buying the ETF, note that the Motley Fool Stock Advisor analyst team identified 10 best stocks for investors now, excluding the Vanguard S&P 500 ETF. These 10 stocks could produce high returns in coming years.
Examples include Netflix, recommended on December 17, 2004, where a $1,000 investment would now be $474,578, and Nvidia, recommended on April 15, 2005, where $1,000 would be $1,141,628. Stock Advisor's total average return is 955%, outperforming the S&P 500's 196%.
Stock Advisor returns are as of January 20, 2026. JPMorgan Chase is an advertising partner of Motley Fool Money. Geoffrey Seiler holds positions in Alphabet, Amazon, and Vanguard S&P 500 ETF. The Motley Fool holds positions in and recommends Alphabet, Amazon, JPMorgan Chase, Nvidia, and Vanguard S&P 500 ETF.