I want to give the complete explanation of what happens to your money when you invest in an index fund, because many people invest without fully understanding the mechanism.

When you buy shares of VTI (Vanguard Total Stock Market ETF), you are buying ownership stakes — proportionally tiny, but real — in approximately 3,600 US companies. Your $1,000 is distributed across every publicly traded US company in proportion to their market capitalization.

When those companies earn profits, some is paid as dividends (which VTI distributes quarterly) and some is retained, which should increase the company's value over time, which increases the share price.

When you sell your VTI shares, you're selling your ownership stake at whatever price buyers are currently willing to pay. If the underlying companies are worth more collectively than when you bought, the price will be higher.

The index fund doesn't make bets. It doesn't pick winners. It owns everything. When the overall economy grows and corporate profits expand over long periods, the index fund value grows proportionally. This is why long-term returns are positive: the fundamental driver is economic growth, not speculation.