When people ask: “How is the US stock market doing?” They general refer to how is the S&P 500 doing.
The S&P 500 is an abbreviation from “Standard & Poor’s 500” which is an index of the 500 biggest companies in the US. This index is market capitalized, which means that the biggest companies have bigger weight or a bigger percentage of index than smaller companies. Until now, this index is considered to be the best representation of the health of US companies.
So how do we buy the index?
We can buy the S&P 500 through Index funds and ETFs.
I will just cover my favorite index fund which is the Vanguard 500 Index fund. This fund has an expense ration of 0.14%, this means that you pay $14 of fees for every $10,000 invested. It has a minimum of $3,000 US to buy it and after that you can deposit as little a $1 to make subsequent purchases.
But I prefer to buy ETFs instead of index funds. I will not go into details of the differences of index funds and ETFs, just think of them as almost identical products with some slight differences which I will not explain at the moment.
In the ETF realm there are two which overshadow all the rest.
- The iShares S&P 500 Index Fund (IVV) with an expense ratio of only 0.04%, and
- the Vanguard S&P 500 ETF (VOO)
Whenever I suggest to my friends to have some US in their portfolio, this is my suggestion the S&P 500. Generally, I suggest to my friends to have 1/3 of their portfolio in Canada, 1/3 in the US, and 1/3 in international stocks. In other blogs I will share my favorite Canadian and International ETFs
I am a money coach, don’t hesitate to write me if you want to talk about money or anything else that is going on in your life.