Investing in the stock market is an effective way to build long-term wealth. But we don’t do this enough in the UK. Only 23% of Brits invest in shares (outside of pensions) compared to 61% of Americans. This is a depressing transatlantic divide.

It’s great to see the shares have been covered recently Martin Lewis Finance Program for the first time. Personal finance gurus perform an essential public service by raising awareness of the sophisticated returns the stock market can provide.

Martin Lewis focused on index funds tracking, among others: FTSE100, FTSE250AND S&P500. This is a good starting point, but investors with sufficient risk tolerance may consider going further and adopting the model Silly approach.

Advantages of index funds

Investing in tracker funds is very attractive. This is a passive way to diversify your business into different sectors.

The case for long-term stock market exposure is compelling. As Martin Lewis emphasized, over time cash loses its real value due to the destructive impact of inflation. Over the past 10 years, this has even affected those who chased the highest interest rates on savings accounts by regularly switching between banks.

Index funds, on the other hand, tend to grow in real terms over long periods of time. Over the last decade, the FTSE 100 index has delivered an annual return of 6%. For the S&P 500, it’s a remarkable 13.6%. Both easily beat UK inflation, delivering real growth.

This does not mean that there are no threats. Stock market volatility means index funds are not a suitable investment for short-term goals or saving for a rainy day. And crashes can be brutal, as the FTSE 100 index return of -44.8% in 2008 shows.

However, I think the stock market has a lot to offer to patient investors with long-term goals and the steely determination needed to avoid selling in tough times.

What’s more, the Cash ISA allowance will be reduced to £12,000 for under-65s, but the Stocks and Shares ISA limit will remain at £20,000. For those with significant savings, this is another good reason to consider stocks.

Turbocharging your stock portfolio

Buying individual shares is something Martin Lewis didn’t mention. This requires more research than investing in index funds and is undoubtedly a riskier strategy.

However, fortune often favors the brave. Take an example Rolls-Royce (LSE:RR.) – shares of a FTSE 100 company that I own.

Rolls-Royce shares are up 861% in five years, delivering returns no index fund can match. I also don’t think it’s too overdue to consider buying the stock today.

The civil aviation department – the largest in the company – is working at full capacity. A sturdy recovery in international travel following the Covid pandemic and a fresh joint venture with Air China in Beijing suggest 2026 could see further success.

NATO’s pursuit of militarization in the face of Russian aggression bodes well for the defense business. In recent months, Rolls-Royce has signed lucrative contracts to supply engines for Leopard 2 battle tanks and Eurofighter Typhoon aircraft.

The group’s petite modular nuclear reactors also have enormous potential. Rolls-Royce is well positioned to capitalize on the growing demand for reliable power for data centers and critical infrastructure.

It’s true that a forward price-to-earnings (P/E) ratio above 35 means the stock isn’t budget-friendly, which increases the risk of a potential sell-off. However, I am bullish that Rolls-Royce can continue to improve the performance of my portfolio next year and beyond.