Marcos Milla
Former Analyst at the Federal Reserve, ETF/Stock Newsletter Author
The S&P 500 is one of the best long-term investments, giving instant diversification across 500 of the largest US companies in one low-cost, tax-efficient fund. The index has returned about 10% a year on average with dividends reinvested, its dividend has grown about 7% a year over five years, and it has rallied back from nearly every crash or downturn, supporting steady dollar-cost averaging. x.comÂ
The Vanguard S&P 500 ETF works as a foundation that doesn't depend on getting every stock pick right. It gives exposure to about 500 large US companies for a 0.03% annual expense ratio, roughly $3 a year per $10,000 invested. The plan is to keep adding to it over time and build individual stocks around it. x.comÂ
Buying an S&P 500 index fund at 26 is an incredible strategy for reaching future financial freedom, because of the time value of money over a long horizon. Allocating capital to individual stocks is fine, but the index fund should not be forgotten. x.comÂ
The US stock market as a whole is pretty expensive relative to history, making this a better time to pick individual stocks than to put a lump sum into an S&P 500 index fund. x.comÂ
The S&P 500 fund VOO beats covered-call income ETFs like GPIX and QQQI because covered calls cap upside, leaving long-run returns worse. Since GPIX's October 2023 inception, VOO has compounded 26.4% a year versus GPIX's 23.6%, while QQQ's 25.4% beat QQQI's 21%. Fees add drag of about 1.1% for GPIX and 2.2% for QQQI versus 0.1% for VOO, and large monthly payouts are tax-inefficient. x.com x.comÂ
Buying the S&P 500 and forgetting about it for 30 years beats 95% of hedge funds. Average results are the winning strategy, yet almost nobody can sit still long enough to execute it. x.comÂ
An all-cash rental property beats the S&P 500 on cash flow. $150,000 in an S&P 500 index fund yields about $250 a month in dividends, while the same amount in an all-cash rental yields about $1,000 a month, with 4% annual property growth budgeted. x.com x.comÂ
Most retail investors who hold concentrated portfolios underperform a diversified benchmark like VOO. Depending on the study, typically 70-85% or more of those holding 10 or fewer stocks trail it most of the time, because of behavioral biases, higher volatility and missing the skewed winners that drive market returns. x.comÂ
Schwab US Dividend Equity, JPMorgan Nasdaq Equity Premium Income, Vanguard S&P 500 and NEOS S&P 500 High Income together deliver monthly cash flow without selling shares, while SCHD and VOO add growth. The four-ETF portfolio produces almost $48,000 a year of passive income, with a goal of $80,000 by 2028. It is one piece of a wider portfolio, with rental real estate handling growth and tax efficiency. x.com x.com x.comÂ
Putting everything into the Vanguard S&P 500 ETF is hard to go wrong with, because most retail investors lose money trading individual stocks. That is the reply to a 36-year-old weighing liquidating everything into it and moving on with life. x.comÂ
Buying a broad index fund consistently over many years is one of the best strategies for most investors because it is simple, diversified and easy to stick with. US funds tracking the S&P 500 or Nasdaq-100, optionally with non-US exposure, have historically returned around 8-10% a year on average for patient holders. They are less volatile than individual growth stocks, need little upkeep and spare investors from reacting to news. UK pensions locked until 55-57 make holding long easier. x.com … Show more
