When it comes to building long-term wealth, few investments have stood the test of time like the S&P 500 index.
And for Australian investors, the iShares S&P 500 ETF (ASX: IVV) offers one of the easiest ways to tap into that success.
This ASX ETF tracks the performance of the 500 largest stocks in the United States. These are many of the most powerful, innovative, and profitable businesses in the world. That includes global giants such as Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), Amazon (NASDAQ: AMZN), and Alphabet (NASDAQ: GOOGL).
These companies have shaped entire industries, driven technological revolutions, and delivered exceptional shareholder returns for decades. It is no surprise the S&P 500 index has historically generated an average annual return of around 10% over the long term.
Let's imagine that kind of performance continues, not necessarily in a straight line, but on average over the next decade.
What $10,000 could grow into in 10 years
If you invested $10,000 in the iShares S&P 500 ETF today and it compounded at an average annual return of 10%, after 10 years your investment would more than double in value to approximately $26,000.
That's a total gain of $16,000 simply by holding and reinvesting distributions. There's no trading, no speculation, just the steady effect of compounding.
Of course, markets don't move in perfect lines. There will be years of volatility, corrections, and recovery. But over time, the resilience and earnings power of the S&P 500's largest stocks have tended to win out.
What makes this realistic is the strength of the IVV ETF's underlying holdings. Apple and Microsoft continue to dominate global software and hardware ecosystems. Nvidia sits at the centre of the artificial intelligence and data centre boom. Amazon and Alphabet remain leaders in e-commerce, cloud computing, and digital advertising.
These companies aren't just growing; they are shaping the next decade of global productivity and innovation. And the iShares S&P 500 ETF allows investors to benefit from all of it with a single trade.
Want to supercharge your wealth?
The above example is based on a single investment into this ASX ETF. But what if you could invest the same amount each year into this fund?
If you invested $10,000 upfront and then added another $10,000 every year for the next 10 years, and achieved the same 10% average annual return, your portfolio could grow to approximately $175,000.
Of that, $100,000 would be your total contributions, and around $75,000 would come purely from compounding.
That's the power of consistency. By combining time, discipline, and regular investing, you accelerate compounding and give your money the chance to work harder for you year after year.
