For some people, the most challenging thing about investing is actually starting. Not because they don’t know how or don’t want to but simply because they don’t know where to begin. If you’re feeling this way, take comfort in knowing you’re not the first person, nor will you be the last one.
Investing doesn’t have to be hard, nor should it be. If you’re still figuring out your investing strategy and which stocks are right for you, you can still invest. No need to delay it further; use this index fund in the meantime.
When in doubt, look toward the S&P 500
The S&P 500 is an index that tracks the largest 500 public U.S. companies by market cap. It’s the most followed index and is often used to gauge how the overall stock market is performing. While the S&P 500 is an index, different financial institutions put together their own respective S&P 500 funds that mirror the index.
Since the criteria for the companies within these index funds is already set, the only thing that usually varies between them is the expense ratios. For example, the Vanguard S&P 500 ETF has an 0.03% expense ratio, but the SPDR S&P 500 ETF has an 0.0945% expense ratio. When deciding which S&P 500 index fund to go with, you can’t go wrong with the Vanguard S&P 500 and its low cost.
Kill three birds with one stone
An S&P 500 index fund is a trifecta for investors: diversification, blue chip stocks, and spread-out risks. Since the S&P 500 only contains large-cap stocks (companies with a market cap of more than $10 billion), you won’t get complete diversification, but it comes very close, containing companies from all 11 major sectors:
- Communication services: 8.10%
- Consumer discretionary: 11.70%
- Consumer staples: 6.90%
- Energy: 4.60%
- Financials: 10.90%
- Health care: 15.10%
- Industrials: 7.90%
- Information technology: 26.40%
- Materials: 2.50%
- Real estate: 2.80%
- Utilities: 3.10%
Within those sectors are blue-chip stocks, which are well-established household names that have stood the test of time and…
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