ETFs
What is the best way to invest in stocks without any experience? Try this ETF.
Congratulations! You have decided to start making your money grow in the stock market. This first step is commendable. However, you are overwhelmed by the complexity of it all. And you don’t know where to start.
There is no reason to worry. Investors who lack experience in the stock market should consider this popular and proven solution. exchange traded fund (ETF). Let’s take a closer look at how you can start building lasting wealth today.
Providing you with broad market exposure
Investors should know Vanguard S&P 500 ETF (NYSEMKT:VOO). It follows the most popular index of the moment, the S&P500, which tracks the stock market performance of the 500 largest and most profitable U.S. companies. It’s essentially like betting on the long-term growth of the American economy, taking advantage of the innovation that has long characterized this country.
By purchasing the Vanguard S&P 500 ETF, you gain broad exposure to all sectors of the economy, as well as companies of all shapes and sizes. I’m sure you’re familiar with some of the dominant tech companies that seem to constantly be in the news. With this ETF you will own companies like Nvidia And Apple. But the Vanguard S&P 500 ETF also owns much smaller companies, such as Henri Schein (dental and medical supplies) and CH Robinson around the world (logistics).
It’s important to understand the historical performance of the Vanguard S&P 500 ETF. Over the last decade alone, it has generated a total return, including dividends, of 233%. This translates to a superb annual gain of 12.8%. This means that if you had invested $10,000 in this ETF 10 years ago, you would have over $33,000 today.
What’s really telling is that as a beginner with no experience, if you buy the Vanguard S&P 500 ETF, you will likely outperform the professionals. Studies have shown that over a 10-year period, 90% of active large-cap fund managers lose to the S&P 500. Investing in this ETF seems like an obvious decision.
A winning investment vehicle
While performance is a key factor to consider, there are other variables you need to be aware of with the Vanguard S&P 500 ETF. And they might just give you even more incentive to put your money to work.
An often overlooked benefit of investing in this ETF is that it does not require financial analysis skills. And investors don’t need to spend hours reading annual reports or listening to earnings calls. This frees up time to do the things that are most important to you.
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Another advantage is that the fund’s fees are extremely low. A $10,000 investment in the Vanguard S&P 500 ETF would cost you $3, based on a 0.03% expense ratio. This means you keep more of your money over time, which is obviously a positive.
Perhaps the most obvious benefit of purchasing the Vanguard S&P 500 ETF is that it can be fully automated. You can adopt a cost averaging (DCA) strategy, setting aside money each month or quarter. You don’t even need to think about it. Plus, you develop a valuable habit of consistent saving and investing.
You may be wondering if it’s still a good time to invest, especially with the S&P 500 near record highs. Following the DCA route completely eliminates the need to time the market correctly. Instead, you simply benefit from multiple purchase points. Time in the market is much more important for building lasting wealth.
If you are new to the world of investing, don’t worry. While it can be intimidating to know where to start, I think there aren’t many better options than the Vanguard S&P 500 ETF.
Should you invest $1,000 in the Vanguard S&P 500 ETF right now?
Before purchasing shares of the Vanguard S&P 500 ETF, consider this:
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Neil Patel and its clients have no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends the Apple, Nvidia, and Vanguard S&P 500 ETFs. The Motley Fool recommends Ch Robinson Worldwide. The Mad Motley has a disclosure policy.
What is the best way to invest in stocks without any experience? Try this ETF. was originally published by The Motley Fool