WAKE UP RESTED & WEALTHY – INVESTING IN AN S&P 500 ETF!
Investing in the S&P 500, a stock market index including the 500 largest publicly traded companies in the U.S., is a great strategy to achieve financial freedom and sleep at night. The S&P 500 had an average annual return of around 10% over the past several decades. Investors benefit from the growth of the U.S. economy and the success of some of the world’s most well-known companies.
YOU MAY RECOGNIZE SOME OF THE NAMES OF THE S&P 500, 10 LARGEST HOLDINGS
The most valuable companies make up almost 30 percent of the index value.
| 1 | Apple Inc. |
| 2 | Microsoft Corp. |
| 3 | Alphabet Inc. |
| 4 | Amazon.com Inc. |
| 5 | Tesla Inc. |
| 6 | NVIDIA Corp. |
| 7 | Berkshire Hathaway Inc. |
| 8 | Meta Platforms Inc. |
| 9 | UnitedHealth Group Inc. |
| 10 | Johnson & Johnson |
S&P 500 BENEFITS:
- Diversification: You are spreading your money across 500 different stocks, protecting your portfolio from the volatility of any one company or sector.
- Low fees: S&P 500 ETFs have some of the lowest fees of any investment. This is because they are passively managed, meaning they are not actively buying and selling stocks. This will save you money in the long run and allow your money to grow faster.
- Historical returns: A long history of solid returns, with an average annual return of around 10% over the past century.
- Easy to buy and sell: S&P 500 ETFs are traded on major stock exchanges.
- Tax-efficient: Because S&P 500 ETFs are passively managed, they tend to generate fewer taxable capital gains than actively managed funds. This results in lower taxes and a more tax-efficient portfolio.
THE S&P 500 INDEX FIVE YEAR PERFORMANCE – 55.28%
VANGUARD S&P 500 ETF (VOO)
One of the most purchased indexes is the Vanguard S&P 500 ETF (VOO) which tracks the returns of the S&P 500 index. The Vanguard S&P 500 ETF offers low fees because the fund’s management team is not actively trading and instead just mirroring the S&P 500.
S&P 500 SECTORS
| S&P 500 Sector Weighting | |
| Sector | Index Weighting |
| Information Technology | 28.0% |
| Health Care | 13.6% |
| Consumer Discretionary | 12.0% |
FEE FI FO FUM – MIND THOSE BLASTED FEES!
The most important factors in choosing an index or mutual fund are LOW FEES, LOW FEES, LOW FEES. {Fee-fi-fo-fum, I smell the blood of an Englishman, Be he alive, or be he dead, I’ll grind his bones to make my bread.}
Vanguard charges an expense ratio of 0.03 percent. If you buy $10,000 of the Vanguard S&P 500 ETF, Symbol VOO, you pay $3.00 a year. Look closely at the fees ANY Mutual Fund or ETF is charging. If the ETF or fund is indeed mimicking the performance of the S&P 500 and is offered by a reputable firm, find the lowest-cost index. VOO is one of the lowest-cost S&P 500 indexes.
DIVERSIFICATION
Exxon Mobil, BP, Lockheed Martin, and the S&P 500 March 2019- March 2022 Returns
I worked for three major corporations: Exxon Mobil, BP, and Lockheed Martin. The below chart shows the three-year performance of those companies and the S&P 500 {March 2019 to 2022}. The S&P ETF had significantly better returns.
Diversification is one reason to avoid investing > five to ten percent of your 401K in your company’s stock.
- BP LOST ~31%
- Exxon Mobil LOST ~3%
- Lockheed Martin GAINED ~48%
- Investing in an S&P 500 Index GAINED 62%.
APRIL IS THE NATIONAL FINANCIAL MONTH
S&P 500 Investing: The Pillow Talk You Need for a Good Night’s Sleep
April is National Financial Literacy Month and an excellent time to start or increase your investing percentage. If you’re looking for a stable, long-term investment option, the S&P 500 ETF is worth considering.
WHAT SUBJECTS DO YOU WANT TO READ MORE ABOUT? WHAT QUESTIONS CAN I ANSWER? UNTIL NEXT TIME!
LET’S MAKE SOME MONEY!
YOUR GREATNESS IS NOT WHAT YOU HAVE; IT’s WHAT YOU GIVE! – SOME CHARITIES I SUPPORT
St Jude Hospital: The mission of St. Jude Children’s Research Hospital is to advance cures, and means of prevention, for pediatric catastrophic diseases through research and treatment. Consistent with the vision of our founder Danny Thomas, no child is denied treatment based on race, religion or a family’s ability to pay.https://www.stjude.org/
Wounded Warrior Project: An American charity and veterans service organization that offers a variety of programs, services and events for wounded veterans of the military https://www.woundedwarriorproject.org
Folds of Honor: Providing life-changing scholarships to the spouses and children of America’s fallen or disabled military. And now, our mission expands to the families of America’s first responders. On our watch, those who protect our freedoms and our families will know they are not forgotten. https://foldsofhonor.org
Wilson’s No-Kill Animal Shelter: A N0-Kill shelter that is a top-rated non-profit. They compassionately care for all their animals. https://wcnkas.org
Tunnel To Towers: Since 9/11, we have been helping America’s heroes by providing mortgage-free homes to Gold Star and fallen first responder families with young children and by building specially-adapted smart homes for catastrophically injured veterans and first responders. We are also committed to eradicating veteran homelessness and helping America to Never Forget September 11, 2001. https://dogood.t2t.org/give/320847/#!/donation/checkout
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FINANCIAL LITERACY IS JUST NOT THAT COMPLICATED – TRUST ME!
LEARNING FROM INTELLIGENT MINDS – IS MANDATORY!
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ABOUT ME
I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an N.C. State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I left a corporate career because I desired to make a difference as a speaker and writer. I was blessed to be coached and mentored by strong women and men in my family and professional life. It is my time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, real estate and am happy to share my finance and investment lessons. I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog as recommendations for your situation. As an investor, you must establish your risk/loss tolerance. Investment in any asset involves risk, including complete loss.
Please seek your licensed CPA or fiduciary financial advisors for individual financial advice.
I write this weekly blog to make an impact by reaching an audience and demonstrating the need for financial literacy. I will help you get there.
