It's truly pretty bad advice to just buy the S&P500. I am a strong advocate for only buying companies you understand and believe in, and the default advice people give of buying SPY or whatever is such a terrible investment if you take a look behind what it actually contains. Try to understand this whole post before commenting. If I asked you point blank, "would you invest in the Fox Media stock", chances are that you wouldn't. Or Alaska Airlines. Or Garmin. Or monster energy (yes). But investing in the SP500 is doing exactly that. Just because it's the easy advice to give, doesnt mean that it should be given. While it has some positives such as getting people wary of the stock market actually invested, in the long run it's a bad investment as opposed to just buying companies you believe in. Also, the more stable and established / dividend oriented companies are unfairly punished due to their small weightings in the S&P500, since when they pay a dividend, anybody with dividend reinvestment selected (most people who buy the S&P) will allocate it unevenly as a result of the large weightings of mega caps in it anyway. Say company 450 pays a $5 dividend. If you really believed in company #450 in the S&P, you would buy their individual stock, and reinvest the dividends directly into said stock, resulting in more buying pressure and therefore upside on it. Instead, of that $5, 7% goes to buying apple stock, 5% to google, 3% to amazon etc, and company #450 gets 0.01% of the $5. It unfairly props up the bigger companies. Just invest in mega caps in the first place if you are buying ETFs. Diversification is good, but you will get better returns with a little more concentration. People say ETFs are diversified but big tech accounts for a huge relative proportion of both the S&Ps portfolio weighting as well as its returns anyway. Before anyone asks what the alternatives are, or what I do instead, I'll give a brief outline. I have a big tech allocation, a banking stocks allocation, a small speculative allocation, and bonds for when I want pure stability. Think about it this way: Do you go to starbucks? If yes, buy SBUX. do you bank with chase? buy JPM. do you use an iPhone? Apple. vs just buying ETFs: do you watch Fox News? No? Too bad, you are buying fox shares indirectly. Do you drink energy drinks? No? Too bad, you are buying MNST shares. etc. ETF investing results in you investing in companies you may actively dislike, propping up their share prices indirectly. not only that, it results in an unfair allocation of dividends when reinvested. since big companies are overweight and account for the majority of returns anyway, just buy companies you know and like.
Sp500 beats most actively managed funds. Lot of people don't have time for individual stocks.
yes, because actively managing a fund is not long term investing. I made the majority of my NW from individual picks over years, because I was targeting growth and not preservation. im not saying im a genius at picking companies, but I understand that by removing under performers from the S&P you will have better gains.
active management isn't long term investing? fuck, you better tell my employer that they've been doing it wrong for 90 years.
Yeah, but some people would be vehemently against supporting it and yet invest indirectly 🤷♂️
No, the premise was since etfs are already semi concentrated, to embrace it directly. There’s no contradiction.
The post is long, hard to read and points seem to be contradictory. First OP says you need to understand a company to trade their stock but then says use simple emotion as like/dislike product for guidance.
When you start with products you like and use, you can use that base as a starting point before researching the parent companies? The point of saying to invest in companies you use is because chances are so do lots of people, but they would never actually think about investing in them directly.
Hence my allocation to the banking sector, even though realistically they are the most parasitical businesses out there.
If you really have the time and energy to research individual stocks, go for it. Otherwise s&p is the best as long as you believe in U.S economy. I do
I’m not reading all that. Long live VOO!
I love wework wooooo all in at 16 cents yolooooo
Why don’t you join Wall Street or start your own fund as you are able to beat the market consistently over a long period of time? Why are you still working for a living ?
Ive tried the finance route. I actually got a degree in finance alongside computer science, but found that I preferred to keep the finance stuff to a hobby on the side. I am passionate about finance, but realised if I made a career of it I’d hate my life. Plus being restricted from trading the markets would suck.
I hate Facebook but I own Meta stock 🤑
Time management, Risk Management and the Greek letters of the market; if you have a good grasp of these fundamental concepts; you can invest on your own but sadly a lot of people don't, that is why index funds are the best for folks who can't grasp the above :)
One word: diversification
Clearly you didnt read the post. Would you diversify into monster energy drink stock if actively making that decision?
I wouldn’t by myself and thats the point. Someone knows and doing the research for me so i just give them the money.