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To start, I’m assuming you’re talking about low-cost index funds tracking the S&P500. All of the “actively managed” funds tracking an index are, IMO, farces designed to extract money for the fund managers rather than delivering value to the (index fund) share holders. A passively-managed index fund is a fairly boring (and cheap) operation to manage, primarily buying and selling shares to keep the same proportions as the tracked index, be it the popular S&P500, the CRSP Total US Market index, or any other imaginable index. The low-cost appears in the very low expense ratio, some measured in single-digit hundreds of 1 percent (eg 0.04% for VTSAX).

As for whether an index fund tracking American large-cap stocks is a “sure fire” investment, absolutely not. Any investment needs to be viewed in terms of its appropriateness, such as being properly diversified (within one’s abilities) and the timescale must match one’s financial objectives. The conventional adage is that everyone would like to win the lottery, but when pressed for a more specific answer, most would say that they just want to live without worrying about finding an income. That is to say, they’re just looking for “enough”.

Practical financial advice aims to sustainably achieve “enough”, usually framed in terms of retirement but quite frankly, the process works for all sorts of goals, such as saving for higher education for oneself or a child, buying a car, building a marriage dowry, or planning to support aging parents. What’s distinct with these scenarios are: the amount needed, and the time remaining to achieve that amount.

For a mid-20s newly-employed knowledge worker (eg mechanical engineer), they have about 40 years until retirement age. Time is a very valuable asset, because time can overcome short-term problems like economic recessions or high interest rates. Even if a recession strikes just prior to turning 65, the nest egg will have grown with 40 years of dividends prior to the recession taking a small haircut. Alternatively, starting one’s career in a recession means post-recovery investments will bolster the savings.

The large-cap index funds (like S&P500) are high risk, high reward. For someone with a long time horizon and a good savings rate like a young professional, large-cap makes a lot of sense. But this is wholly inappropriate for a retired octogenarian who just needs to draw a steady income to pay their living expenses. After all, having already gotten so far in life, the meaning of “enough” changed from “high growth of nest egg” to “drawing down the nest”. So this retired person would probably have gradually swapped out their index funds for things like bonds, which pay less in dividends but are steady even through recessions and bad times.

For a longer discussion about investing according to one’s definition of “enough”, I would recommend reading some pages from the Bogleheads community, like this one: https://www.bogleheads.org/wiki/Bogleheads®_investment_philosophy

Most people dont invest. It sustainable in the long run cos their is a limited supply the more people who buy the more expensive it is for anyone else to buy.

We can, though. Index funds invest in large swathes of companies - meaning that they are taking part in the productivity of the companies involved.

It doesn’t make you a millionaire, it just gives you a better rate of return over a savings account.

Put money into index funds every paycheck and don’t sell them for 30 years. Compounding returns are damn strong. And yes, lots of people do it, it is the most straightforward and common strategy.

Investing money generates more production and profits, it is very much so not a zero-sum game. There is good reason the average standard of living has increased dramatically over history, and it has increased faster in modern economies with strong monetary availability and movement, something investing directly contributes to.

Nothing is surefire, but I’ve seen the S&P 500 informally considered the baseline, especially when comparing actively managed funds. If you’re paying more and under performing the S&P 500, even if making a profit, you’re loosing out.

With regard to the point about everyone being millionaires, from a macro economic lens, all the dividends you receive from investing in the S&P 500 is because they’re charging more than enough for a product to cover operating costs, business expenses, etc and still have enough to pay out share holders. This means someone somewhere is loosing out, and that money is being transferred from them to you through the companies.

Because it needs spare money.

Because you’re still talking about less then 10% growth, if you don’t have a lot of money, you’re getting an insignificant amount of returns.

Not everyone is actually aware of this.

And in a way, lots of people are doing it through their retirement savings via mutual funds.

we can’t all be millionaires.

Zimbabweans would like a word

It’s not entirely without risk. 2008 saw the S&P lose over 30% for the year, and 2002 was over 20%. But it is up more often than down year-to-year, and it is usually up by at least 10%.

I found some good charts here, even though it is a EU site:

https://curvo.eu/backtest/en/market-index/sp-500?currency=usd

If you are investing for the long haul , you will take the occasional 30% haircut if you can get 10-20% the rest of the time. But it would suck if you got that 30% haircut just before you needed to sell…

Well you need to put a fair amount in for a long time to get that millionair. If you are 20 now you can get there by 40 by maxing out your 401h, but if you are 75 now maxing out the 401k may not have got you there. Many young people have student loans so they can’t max out the 401k and have enough to live. There is also saving for a house in there. And only about 50% even have a 401k option - ira limits are such that I’m not sure you can get to a million with them. Many people also don’t make much even if you get a 401k at fast food (30 years ago they gave you that after 10 years in the store I worked in - when you maxed out and didn’t get raises)

last but perhaps most important there is opportnity cost. several of my classmates have died in accidents long before they could retire. death rates from non accidents start to raise around 60-65 so even if you retire you may not have long to enjoy that wealth. For all of the above people they should have saved zero and enjoyed life young. Of course odds are you will retire but don’t pin all your hopes on life after, start living now. Even if God tells you that you will live to 100, your body will start to have issuse starting between 40 and 55 - there are some activites it will be too late if you don’t do them young - so go climb that mountain if you want.

If exercise makes you so healthy why doesn’t everybody do it?