The longer I invest, the more I realise it's hard to beat the S&P 500 or the ASX 200.
These popular barometers for the US and Australian stock market tend to (over time) provide solid returns.
How much do they rise each year?
While past performance doesn't guarantee future returns, looking back at these markets can offer reassurance.
Over a long period of time, investors have been rewarded for their patience.
In 2025, the S&P 500 Index (SP: .INX) is up a modest 1.23%.
However when we zoom out, and look at the last five years, the index has risen by more than 100%.
That means an investment five years ago would have doubled.
Looking back even further, the last 10 years has seen a return of roughly 12.2% annually.
As for the S&P/ASX 200 Index (ASX: XJO), it is up just 2.23% so far this year.
Over the last 5 years it has risen 52.57%. It has provided annualised returns of approximately 9% over the last 10 years.
How to invest in these indexes
So if you are inclined to invest in one of these reliably performing indexes rather than choosing individual stocks, you might consider an exchange traded fund.
ASX ETFs offer exposure to these markets with one simple trade.
A popular ASX ETF that tracks the performance of the S&P 500 Index (SP: .INX) is iShares S&P 500 ETF (ASX: IVV).
It is made up of the 500 largest companies in the US based on market capitalisation.
It includes blue-chip companies like Apple, Microsoft and Nvidia.
Over the last five years it has risen 104.86%, slightly outpacing the index.
An ASX ETF that tracks the performance of the ASX 200 is iShares Core S&P/ASX 200 ETF (ASX: IOZ).
This fund is made up of blue-chip Australian companies like the big four banks and mining giants.
It has risen 50.60% over the last 5 years, in line with the ASX 200.
How much could a $10,000 investment in these ETFs be worth in 5 years?
While past performance isn't a guarantee for future returns, a hypothetical projection can be a useful exercise to give a broad picture of how patient investing could pay off.
If we take the 10 year annualised return for the S&P 500 index and assume this continues for the next five years, a $10,000 investment growing at 12.2% per year for 5 years would be worth approximately $17,623.
So in simple terms, if you invested $10,000 in an ASX ETF like the iShares S&P 500 ETF (ASX: IVV) and it grew at the same rate seen over the last 10 years, you could end up with more than $7,000 profit.
Looking at the ASX 200, which has had annualised returns of roughly 9%, a $10,000 investment today would grow to approximately $15,386.
Foolish takeaway
Perhaps there's nothing exciting about ASX ETFs that track the US and Aussie markets.
But ETFs like these can give you instant diversification for your portfolio while still giving you very real upside.
A 9-12% return is nothing to turn your nose up at, and many investors have tried (and failed) to outperform these markets by picking and choosing risky options.
