Whether you're saving for retirement or simply looking to increase your net worth, investing in the stock market is one of the easiest and safest ways to build long-term wealth.
If you're looking for a relatively safe and low-maintenance way to get involved in the stock market, you can't go wrong with an index fund. An index fund is a group of securities bundled together into a single investment, so by investing in just one fund, you can instantly gain a stake in hundreds of stocks at once.
While there are countless index funds to choose from, there's one fund with a long track record of surviving even the worst market crashes and experiencing positive total returns. It's approved by billionaire investing legend Warren Buffett himself.
And with the right strategy, it might even help you earn $1 million or more.
There's no way to avoid risk entirely when investing in the stock market, but one of the safer investment options is the S&P 500 index fund.
This type of investment tracks the S&P 500 (SNPINDEX: ^GSPC), meaning it includes stocks from every company within the index. These companies are among the largest and strongest in the U.S., ranging across a wide variety of industries -- from tech to financials to consumer goods and more.
Investing in just one index fund can help you achieve instant diversification, significantly lowering your risk. In general, the more variety you have within your portfolio, the more protected you are against market volatility. While S&P 500 index funds will still face short-term ups and downs, they're far more likely to recover and go on to see positive long-term returns.
In fact, the S&P 500 itself has a flawless track record of surviving downturns. Analysts at investment research firm Crestmont Research examined the S&P 500's long-term performance -- specifically, its total returns over 20-year periods.
They found that every single 20-year period in the index's history has ended in positive total returns. This means that if you'd invested in an S&P 500 index fund at any point and held it for 20 years, you'd have made money.
Buffett also highly recommends the S&P 500 index fund, and he even owns two types of funds through his conglomerate, Berkshire Hathaway: the Vanguard S&P 500 ETF (NYSEMKT: VOO) and the SPDR S&P 500 ETF Trust (NYSEMKT: SPY).
Buffett famously bet $1 million that an S&P 500 index fund could outperform actively managed funds over a 10-year period starting in 2008. His investment earned total returns of 125.8% in that time, while the five hedge funds earned returns ranging from just 2.8% to 87.7% -- averaging around 36% between the five.