From Café Lattes to Dining Hall Buffets
When you walk into the South Village dining hall at UNC Charlotte for dinner, you're hit with an overwhelming number of choices. The homestyle hot buffet, the grill stacked with protein, the fresh salad station, and of course, the endless pizza. Last week in From Coffee Money to $1.5 Million we talked about skipping a latte and investing your coffee dollars instead. Here's the twist: the S&P 500 isn't one flavor of coffee. It's the entire café menu plus the buffet line. There's something for everyone. The index isn't just one food group; it's the buffet of the American economy.
The "Honey Bee" Latte from Maven Coffee in Wilmington, NC. Highly recommend.
Time in the Market Wins
For the past 100 years, the index has returned an average of 10% annually. The longer you hold, the higher your chances of beating even the most professionally managed funds. Volatility and uncertainty are baked into the recipe, and there will be both good and bad years. However, the market tends to stabilize around that 10% return, which is how it's earned its reputation as the benchmark investors aim to beat. The old saying, "If you can't beat 'em, join 'em," rings true here, since most investors, professional or not, struggle to beat the benchmark; the smarter move is often to buy the overall market instead. If your investments don't outperform the index, your assets should offer more stability in exchange for lower returns; otherwise, you're just holding onto a dud.
How the Sausage Gets Made
The S&P 500 is market-cap weighted (based on each company's total market value), meaning larger companies occupy a larger share of the index. In 2025, Apple, Microsoft, Nvidia, Google, and Amazon make up roughly 30% while the other 495 companies fill in the remaining 70%. Standard & Poor's, the creator and maintainer of the index, reviews the list every quarter to make sure it stays proportional and reflective of the U.S. economy. Not just any company can slide underneath the glass-encased buffet display. To qualify, a business has to be U.S.-based, profitable for four straight quarters, and big—at least $20 billion in market cap. The committee also looks at the bigger picture: does the index still represent America's economy? When it doesn't, they rotate the menu. In the 2000s, Blockbuster and Sears were ousted, while Meta (then known as Facebook) and Visa stepped in; digital giants displaced legacy retail.
The Five That Drive Profits
The most prominent companies in the index generate hundreds of billions in profit each year. Apple sells hardware and software you use every day. Microsoft runs Windows, Office, and Azure, the backbone of thousands of businesses and websites. Google dominates the internet through its search ads and YouTube services, while its data center division continues to expand. Amazon is both a retail monster and a cloud computing powerhouse through Amazon Web Services. Nvidia designs the semiconductor chips powering everything from gaming rigs to AI servers—and sells them to nearly every other large company. Just five names, yet they show why owning these corporations has been such a consistent wealth builder. Instead of being limited to one food group at the dining hall, consider grabbing an ETF like SPLG or VOO to instantly own all 500 of America's most profitable companies.
If one side disappoints, you've got another on your plate. The next trick is keeping more of that plate for yourself, which is where tax efficiency and Roth IRAs come in.
