Reader, Here's One Investment You Should Not Ignore in 2026

Hi Reader,

Every year brings a new mix of headlines, innovations, fears, and opportunities that can unsettle even seasoned investors. In 2025, developments like renewed trade tensions and the rise of AI-driven players have caused short-term market jitters. Yet, despite the noise and volatility, the S&P 500* grew by more than 16% this year.

This is exactly why I often emphasize the power of pooled investment funds, especially S&P 500 index funds or ETFs. Today, I want to break down why I strongly believe this remains one of the best starting points for passive investors who don’t have the time, energy, or desire to monitor markets every day.

Ease and Time Efficiency. Let’s be honest - most of us don’t have 30 hours a week to research individual stocks, track market trends, and time our entries and exits. It’s tempting to believe you can spot the next Amazon or Nvidia, but doing so consistently is more luck than skill. Investing in an S&P 500 index fund removes the guesswork, allowing you to grow your wealth without constant oversight.

The Diversification Benefit. Would you rather bet big on a few companies or spread your risk across 500 of the largest publicly traded U.S. companies? Investing in an index fund like the S&P 500 spreads your risk across 500 of the largest publicly traded companies in the U.S. across various industries, such as technology, healthcare, financials, and consumer goods. This broad exposure reduces the risk associated with investing in a single company or sector.

Emotion-Free Investing. Automating your investments by contributing a fixed amount monthly helps remove emotion from the equation. This approach, known as dollar-cost averaging, means you naturally buy more shares when prices are low and fewer when prices are high, smoothing out your investment costs over time.

Consistent, Proven Returns. For decades, the S&P 500 index has delivered an average annual return of around 10%. In contrast, most retail investors, and even many professional fund managers, fail to achieve this level of performance. In fact, over the past 15 years, more than 80% of actively managed large-cap funds have underperformed the S&P 500.

Low-cost investing. Perhaps the best part? The cost advantage. Index funds tracking the S&P 500 often have ultra-low expense ratios, sometimes as low as 0.03%. Many funds that track the S&P 500 have low expense ratios. Index funds offered by Vanguard or Fidelity have expense ratios as low as 0.03%. If you invest $10,000 in a fund with a 0.03% expense ratio, you’ll pay $3 annually in fees. Compare that to the high costs of frequent trading or actively managed funds, and the savings add up significantly over time.

Finally…

Even legendary investors like Warren Buffet and institutional fund managers like David Swensen advocate for a simple approach: investing in a low-cost index fund. Why do the guesswork of picking individual stocks when you can own a slice of the entire market and benefit from relatively predictable long-term growth?

That said, this doesn’t mean you should avoid individual stocks altogether. If you work in financial markets and have real-time access to high-quality, real-time information, stock picking may make sense. Alternatively, you could allocate a small portion of your portfolio to individual stocks - or subscribe to a reputable stock-picking service - while keeping the core of your investments diversified.

Reflect on This:

• Am I more focused on timing the market, or time in the market?

Till next week, I am rooting for you, money-ly!

Dee

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*The S&P 500 index also known as the Standard & Poor's 500, is a stock market index that measures the stock performance of 500 of the largest companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices and is often considered a benchmark for the overall health of the U.S. stock market and economy.

Disclaimer: This does not constitute financial advice. Please conduct your research or consult your financial advisor for important financial advice.