Your index fund returns about 10% a year. Here's what's left after a debased dollar.

For most people building wealth in their 40s and 50s, the plan is some version of the same sentence: put money in a low-cost S&P 500 index fund and let it compound. It's sound advice — and for decades it worked. But "about 10% a year" quietly assumes something that hasn't been true lately: that the dollar you're measuring those returns in holds its value.

Over the long run, U.S. large-cap stocks have returned roughly 10% a year on average, including dividends. Strip out long-run inflation of about 3% and you're left with something closer to a 7% real return. That real number — not the headline — is what actually grows your purchasing power. And in the last few years, the gap between the two has widened in a way most savers never see on their statement.

The measuring stick is shrinking

Returns are denominated in dollars, so the dollar has to be stable for the number to mean what you think it means. It hasn't been. In response to the pandemic, the M2 money supply expanded from about $15.4 trillion in February 2020 to roughly $21.8 trillion by April 2022 — a 41% increase in just over two years, the largest monetary expansion in the modern record.

More money chasing the same goods does what it always does. The cumulative effect: prices rose roughly 24% from 2020 to 2025, and a dollar lost close to a fifth of its purchasing power over that stretch. The chart below is the same story from the dollar's point of view — a long, grinding decline that steepened sharply this decade.

Two problems hiding inside a great long-term bet

The first is the one above: a chunk of that nominal 10% isn't getting you ahead — it's running to stay in place against a debasing dollar. The second is more structural. An index fund is a one-way bet: it only builds wealth when the market rises. That's been a fine assumption across a 40-year tailwind of falling interest rates — but it isn't a law of nature.

Ask anyone who started investing in 2000. From the dot-com peak through roughly 2013, the S&P 500 went more than a decade with almost no real price appreciation — a "lost decade" in which buy-and-hold compounding simply didn't happen. The averages eventually recovered, but averages don't pay your bills on the timeline you actually need them.

Index investing is a bet that the market goes up and the dollar holds. Lately, only one of those has been reliable.

None of this means an index fund is a mistake. It's a sensible core. The point is narrower and more important: it is insufficient on its own in a regime where the currency is being debased and the market no longer offers a guaranteed one-way tailwind. What's missing is a source of return that doesn't depend on stocks rising — and that aims to outpace the debasement rather than ride alongside it.

The engine that keeps working when the index doesn't

The two gaps this article exposes — a one-way bet, and nominal gains quietly eaten by a debasing dollar — are exactly what Vector Systems is built to close. It's a systematic, market-neutral approach that can be long or short across stocks and futures, so it doesn't need the S&P to rise to compound. In the kind of 'lost decade' where your index fund goes sideways, this is the part of the portfolio still working.

And because it pursues returns independent of the market's direction, the aim is to compound at a rate that outpaces the dollar's erosion rather than merely ride alongside it. It isn't a replacement for your core holding — it's the return stream your core is missing.

How it actually makes money — whether the market goes up or down

Most people know only one way to make money in markets — the way they were taught. You buy something, a stock or a fund, and you wait, hoping it is worth more later than you paid. When it rises, you sell, and the gap is your profit. Buy, wait, sell higher. It works — but look at the catch buried inside it: you only win if the price goes up. If it falls, or sits flat for years, your money sits there with it.

There is a second way to make money, and most people never use it: you can profit when a price goes down. You take a position that pays off when something falls instead of rises — that is called going "short." Owning the normal way is going "long." Do both, and you can win whichever way the market moves, not just one.

"Market-neutral" means holding both kinds of position at once — some that pay when prices rise, some that pay when they fall — balanced so the market's overall direction barely matters to you. Picture a shop that sells both sunscreen and umbrellas. It does not need to guess tomorrow's weather; it makes money either way, as long as people keep coming in. A market-neutral system is the same. It does not need the market to go up. It needs the market to move — and aims to be on the right side of those moves, in both directions at once.

That is why returns like the ones below are even possible. An ordinary portfolio waits for one big upward move and prays nothing knocks it down first. A market-neutral system takes its profit from the movement itself — and movement is exactly what frightens everyone else. It is why a chaotic, fearful year like 2025 was the system's strongest, not its worst: more fear meant more movement, and more movement is more to trade.

The guarantee almost nothing else in finance will make

Now the part almost no one else in finance will put in writing. Vector backs the system with a 12-month satisfaction guarantee: if you are not satisfied with your first year, you get your money back.

Now think about everything else sold to people building wealth in their 40s and 50s. A bond locks your money up for years and hands you a fixed coupon — no refunds. A whole-life policy can take a decade just to break even, and surrenders at a loss if you leave early. An annuity charges you to get your own money back slowly. None of them — not one — gives you a year to decide whether it actually worked and then returns your money if it didn't. That simply isn't how financial products are built. The house does not hand the chips back.

A guarantee like that only gets offered by someone who has watched the system work across enough conditions — calm markets, crashes, melt-ups — to stand behind it with their own revenue on the line. It takes the risk off your side of the table and puts it on theirs. That is a very different proposition from being shown a number and asked to trust it.