So I’m new to investing and the more I look into you’re content you talk about SP500, I was looking at the apple stock app- and Robin Hood and thought should I be buying the actual ticker of Sp500 etf (SPY) etf or should I buy companies on the actual list. Thanks for the help!-GM
Hey Gavin, here is a short article about “SPY”. There are a number of different funds which are allocated to follow the S&P500. The point of buy a slice of the whole S&P500 is less risk with a good amount of growth. Because buying enough stock to match the S&P500 is expensive. So then you end up leveraged heavily in a few stocks. (Edit: Check out this post too on EFTs vs Index Funds!)
For instance, let’s say you buy Apple stock. They have been doing well lately and historically they have been a strong performer. Now, let’s say a news article or boycott gains enough momentum to affect Apple’s stock price. If you have JUST Apple stock, your growth and value will plummet. If you have the S&P500, you’ll likely see a small blip, but you have many other companies to pick up the slack. Apple’s shortcomings is a Microsoft or Google’s good day. This obviously goes the other way if Apple does something majorly market shaking and innovative.
All this to say, S&P500 gives you the assurance of historic and consistent growth with a lower level of risk. Side Note: Look into Fidelity or Vanguard to open an investment account. Robinhood is a good gateway for starting investing, but not a good long term investment platform for wealth management.
You should absolutely buy an ETF that represents the entire S&P 500. Picking and choosing stocks inside of the S&P 500 is likely to lead to underperformance and increased risk. If you have enough money to buy all 500 stocks, approximately weighted to their market capitalization, then you are too rich to be chillin’ on these forums and you should seek out a forum on buying private islands.
But seriously, I would look at a 3 fund portfolio of ETFs like VTI, VXUS and BND. Here’s a post on them:
I thought the same thing too when I was learning! That the S&P500 had a ticker symbol. But really a lot of index funds just mimic the S&P500 so there are a lot of similar index funds to choose from. I feel like starting to learn about investing is hard but then your knowledge compounds so you learn exponentially faster