Veteran-turned-trader who regularly beats the S&P 500 shares 3 key tips for 2026. Why passive investors should take note

A retail investor who says he regularly beats the S&P 500 is sharing his playbook for 2026, and the good news is you don’t have to trade like him to get something out of it.

The investor, Marine veteran Erik Smolinski, averaged returns of 24.6% a year from 2018 to 2022 and hit “triple-digit” gains in 2023, according to Business Insider (1).

While his scoreboard is impressive, not every investor needs to try to beat the S&P 500. Smolinski, who runs Outlier Trading, follows three principles that everyday ‘passive’ investors can learn from.

Smolinski recommends looking a few years down the road when building a portfolio. “Make sure that your holdings reflect what you think the world might look like in three to five years from now,” he told Business Insider (1).

For Smolinski, that future revolves around artificial intelligence, but the overall message is to focus on the big picture — not the day-to-day noise or the latest market hype.

Having a long-term mindset lines up with decades of U.S. market history.

Historically, the S&P 500 has typically delivered about 10% annualized returns, including dividends, and accounting for inflation (2).

The data on active management reinforces why a long view pays off.

Morningstar’s Active/Passive Barometer shows that only around 20% of active funds outperform their comparable index funds over the long run (3). And according to the S&P Dow Jones’ SPIVA scorecard, about 65% of active funds under-performed the S&P 500 in 2024 (4).

It all points to staying invested for the longer term and resisting the urge to react to every single market swing.

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Smolinski also stresses the importance of putting your money to work and letting compounding do the heavy lifting. He suggests automating your contributions to make it easier, for example by having a monthly transfer from your paycheck go into an investment account.

Experts at Nasdaq say this dollar-cost averaging (DCA) strategy is a way to hedge against risk as you build wealth over time (5). Sticking to a simple, regular investing plan is a way to manage risk and be more emotionally disciplined, versus trying to time the market.

Compounding can work its magic when you let your investments ride and keep reinvesting over the years.

Smolinski says that boosting your income can make a difference when you’re trying to build wealth. This could mean asking for a raise, going for a promotion or launching a side hustle. He believes that if you have more money coming in, you have more money to invest; and those extra funds could help speed up your journey toward “spending your time, effort, energy, and money on the stuff that you value.”

Research by J.P. Morgan Asset Management found that in U.S. households with similar incomes, those who saved even a few percentage points more consistently ended up with larger retirement balances over time (6). And experts at Vanguard also say that how much you invest can often be more important in the early decades than the return rate you earn (7).

As 2026 begins, low-cost platforms, slick apps and passive investing are keeping everyday investors active in the market.

The big firms have some predictions on what the year might look like.

Vanguard expects U.S. stocks to post moderate but “positive” returns, with long-term projections in the 4% to 5% annual range (8). Meanwhile, Charles Schwab recommends that investors diversify away from just tech (9). Morgan Stanley bets on U.S. stocks to shine in 2026, eyeing the S&P 500 nearing 7,800 as corporate earnings and AI-powered productivity keep markets buzzing (10).

The takeaway is stick to the basics, like Smolinski, by thinking long term, being disciplined and boosting your income whenever possible. Whether you’re just getting started or already deep into your plan, keep these fundamentals in mind.

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Business Insider (1); Officialdata.org (2); Morningstar (3); S&P Global (4); Nasdaq (5); J.P. Morgan (6); Vanguard (7), (8); Charles Schwab (9); Morgan Stanley (10)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.