Latest news with #VanguardS&P500
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a day ago
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Is opting to draw down my 401(k) first to boost my Social Security checks a shrewd move or boneheaded choice?
On paper, drawing down your 401(k) to delay Social Security benefits seems like a clever maneuver. After all, the monthly benefit check grows larger every year that you manage to delay retirement. However, there's more to consider than just the size of the monthly payout. Here's why you, and perhaps your financial advisor, should take a closer look at all the other variables that can impact your retirement income. Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 6 of the easiest ways you can catch up (and fast) Nervous about the stock market in 2025? Find out how you can access this $1B private real estate fund (with as little as $10) A simple calculation would have you believe that it's best to delay collecting Social Security as long as possible. After all, your monthly benefit checks can be roughly 30% higher if you wait until retirement instead of collecting at the earliest possible age of 62, according to the Social Security Administration. However, this theoretical calculation is done in a vacuum and doesn't consider any other factors. Surprisingly, for some people taking Social Security early might actually be the better option when they consider all the other factors. Your total payout from the day you retire until the end of life could be higher. Here's a better approach to make this decision. An often-overlooked complicating (and key) factor in the simple calculation above is the opportunity cost of your 401(k) investments. Every dollar you withdraw from this account is one less dollar that could be compounding with interest payments or the stock market. Over the past five years, the Vanguard S&P 500 ETF has delivered a compounded annual growth rate of 15.85%. In other words, you would boost your nest egg by roughly 30% in just under two years, outperforming the Social Security boost, which is capped. Even if the stock market returns are significantly lower — say 5% compounded annually — your nest egg would be 30% larger within five and a half years. Besides, if stocks are in a deep bear market when you turn 62, it might not be the best time to sell your assets at distressed valuations. Drawing down your 401(k) for monthly income might also be easier if you have a sizable nest egg to rely on. However, if your assets are limited, drawing down on it for several years could leave you feeling squeezed before you ultimately decide to take benefits. Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says — and that 'anyone' can do it Other factors to consider are your health and longevity. Average life expectancy for U.S. adults is 77.5, according to the CDC, which means you're statistically likely to enjoy just seven or eight years collecting benefits if you wait until full retirement age. However, if your end of life is sooner or later it could dramatically shift the calculation. Waiting until full retirement age might be a better financial decision if you expect to live to 90, for example. There are also tax considerations. If you are still working in your mid-60s, drawing down your 401(k) might be a better move than taking Social Security benefits which are subject to taxes. There's a lot of variables to consider, so the ultimate calculation depends on your personal preferences and financial situation. For many retirees in good health with a long life expectancy, it's often wiser to draw down their 401(k) first and delay Social Security to maximize guaranteed, inflation-adjusted income. This strategy offers more control over taxes and can reduce future required minimum distributions (RMDs). However, taking Social Security early may be better for those with health issues, immediate income needs, or smaller retirement savings. Speak to a financial professional and make sure they're considering all these factors before they draft your long-term retirement plan. Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you'll need a substantial stash of savings in retirement Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in 'great wealth'. How to get in now Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? Like what you read? Join 200,000+ readers and get the best of Moneywise straight to your inbox every week. This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Yahoo
2 days ago
- Business
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Tom Lee Predicts the S&P 500 Will Soar 10% in 2025. Here's the Best Way to Benefit.
Lee says he's more confident about the S&P 500 reaching his forecast than he was several weeks ago. The index already has advanced 20% since its April low. 10 stocks we like better than Vanguard S&P 500 ETF › The S&P 500 index, after two years of double-digit gains, has experienced some rocky times in recent months. Investors' concerns about how President Donald Trump's import tariffs may affect the economy and corporate earnings weighed heavily on the index in March and April, even briefly pushing it into a bear market. If tariff levels are high, they could result in rising prices -- and therefore costs -- for companies and individuals. But Trump's recent initial trade deals with the U.K. and China offered investors hope that tariffs will be manageable, and that's helped the S&P 500 regain a significant amount of territory. The major benchmark has climbed 20% since its low in April. Tom Lee, Fundstrat managing partner, has stuck with his prediction for S&P 500 gains for the full year and now says, with companies showing strength in recent times, he's even more confident the index will reach his forecast. Lee's forecast of 6,600 implies a 10% climb from the index's closing level on June 3. How can you benefit from a rising S&P 500 this year? Let's find out. First, a quick note about Lee's forecast. The analyst, in an interview with CNBC earlier this week, said that while reaching 6,600 seemed complicated a few weeks ago, it now seems as if the index may be set to make it happen. "I think businesses are in better shape now than they were in February," he said in the interview. "So, I think making 6,600 actually seems more achievable today than it did in February." In recent weeks, companies across industries have reported earnings for the first quarter of the year. Of the 98% of S&P 500 companies that reported as of May 30, 78% delivered a positive earnings-per-share surprise, and 64% announced a positive revenue surprise, according to FactSet. This has helped stocks advance, even as some elements of uncertainty remain in the market -- such as ongoing tariff discussions and mixed economic data. But if tariff or economic headwinds don't strengthen, the S&P 500 could continue to rise this year to reach Lee's forecast. Now, there's one very easy way to score a win from this movement, and it doesn't involve much time or effort. Instead, it involves one simple purchase, the purchase of shares of a fund that tracks the S&P 500. A fantastic low-cost one is the Vanguard S&P 500 ETF (NYSEMKT: VOO). This exchange-traded fund replicates the composition of the benchmark, setting it up to deliver an identical performance. I call the Vanguard fund "low cost" because its expense ratio is only 0.03% -- ETF fees are expressed as expense ratios, and you should always choose one with a ratio of less than 1% so it won't hurt your long-term returns. This fund fits the bill by a long shot. Investing in this or a similar ETF is a great way to bet on the S&P 500's performance because it offers you exposure to the entire benchmark with one simple operation. And this means you don't have to worry about assembling a basket of the most heavily weighted S&P 500 stocks to attempt to reflect the benchmark -- instead, this investment offers you exposure to the full index. So, should you join in Tom Lee's optimism about the S&P 500 and buy shares of the Vanguard S&P 500 ETF now? It's a great idea, and here's why. If Lee is right, you'll set yourself up for gains in the near term. The positive corporate earnings we've seen at the start of the year along with an improvement in market sentiment in recent months could set the index on the right track. And any potential good news regarding the import tariff situation and the economy at any point in the coming months could offer further catalysts. But here's the best news of all: History shows us the S&P 500 always has advanced over the long run. So, even if the S&P 500 doesn't make it to Lee's target by the end of the year, a purchase of an S&P 500 tracker today could offer you a major win down the road. Before you buy stock in Vanguard S&P 500 ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard S&P 500 ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $668,538!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $869,841!* Now, it's worth noting Stock Advisor's total average return is 789% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy. Tom Lee Predicts the S&P 500 Will Soar 10% in 2025. Here's the Best Way to Benefit. was originally published by The Motley Fool Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
3 days ago
- Business
- Yahoo
This Unstoppable Dividend ETF Could Earn You $5,000 a Year in Passive Income
Dividend ETFs are collections of stocks that pay out a small amount in dividends each month or quarter. The more shares you own of a dividend ETF, the more you'll earn in passive income. By investing consistently over years, you could generate thousands of dollars in dividend payments. 10 stocks we like better than Vanguard Dividend Appreciation ETF › Investing in dividend stocks can be a fantastic way to generate passive income through the stock market, and a dividend ETF can make the process even more hands-off. A dividend ETF is a collection of dividend stocks grouped into a single investment, and this type of investment can take much of the guesswork out of where to buy. Rather than having to research dozens of individual stocks, you can build a well-diversified portfolio with just one or two ETFs. It takes time and consistency to generate a substantial amount of passive income with dividend stocks, but it's possible to create a $5,000-per-year income stream with minimal effort. Here's how. Whether you're just getting started with dividend stocks or you're looking to add a solid ETF to your portfolio, the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) can be a smart choice. One major advantage of this fund is its diversification. It contains 338 large-cap stocks that are fairly evenly allocated across 10 industries. It's most heavily weighted toward tech, with around 23% of the fund made up of tech stocks. By comparison, the Vanguard S&P 500 ETF (which tracks the S&P 500 itself), devotes around 30% of the fund to the tech industry. Greater diversification and less reliance on tech stocks can help limit your risk, especially during periods of volatility. Because this fund is relatively evenly spread across many industries, your investment won't be hit as hard if one or two sectors take a turn for the worse. The biggest perk of investing in dividend stocks is the passive income you'll receive in addition to your investment earnings. You'll earn a small amount in dividends per share, so the more shares you own, the more you'll receive in passive income. The Vanguard Dividend Appreciation ETF most recently paid a dividend of around $0.94 per share per quarter, which would add up to $3.76 per year. That may not sound like much, but again, that's the dividend per share. The more you own, the more you'll earn. To see how many shares it would take to reach $5,000 per year in dividends, we'll need to divide $5,000 by $3.76 for a result of around 1,330 shares. With this ETF currently priced at just under $200 per share, 1,330 shares would add up to an initial investment of around $266,000. Investing that much cash at once is wildly out of reach for the average investor, but there's good news: You can also invest smaller amounts over time. For example, say that you can afford to buy three shares per month, or 36 per year. At that rate, it would take around 37 years to accumulate 1,330 shares in total. Keep in mind, though, that these calculations assume the dividend payment remains the same over those 37 years. This ETF has a long history of increasing its dividend year over year, which means it may not take quite that long to accumulate $5,000 in annual dividend payments. Remember, too, that any dividends you receive are in addition to whatever you're earning in investment gains. Over the past 10 years, this ETF has earned an average rate of return of 11.5% per year. At that rate, if you were buying three shares per month for a total of $600 per month, you could accumulate around $3.5 million after 37 years -- on top of the $5,000 per year in passive income you'd be receiving from dividends. You also don't need to spend $600 per month or invest for 37 years to see substantial gains. Even a small fraction of those contributions could still add up to hundreds of thousands of dollars, in addition to the quarterly dividend payments. Investing in a dividend ETF is a fantastic way to build wealth while also generating passive income, and the Vanguard Dividend Appreciation ETF can supercharge your earnings while minimizing risk. The sooner you get started investing, the more you can potentially earn over time. Before you buy stock in Vanguard Dividend Appreciation ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard Dividend Appreciation ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $656,825!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $865,550!* Now, it's worth noting Stock Advisor's total average return is 994% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Katie Brockman has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard Dividend Appreciation ETF and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy. This Unstoppable Dividend ETF Could Earn You $5,000 a Year in Passive Income was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
30-05-2025
- Business
- Yahoo
ETFs Unfazed by Market Volatility
Volatility may be the defining word from the first half of 2025, but ETF investors just aren't flinching. Despite ongoing economic uncertainty and trade war tensions, ETFs attracted record inflows in the US. So far this year, investors poured $427 billion in new assets into ETFs, far surpassing the $301 billion over the same period last year, according to Morningstar. Much of this has flowed into equity ETFs as investors look to buy the dip, but diversification still remains key for advisors and their clients. 'The appetite for funds has not wavered,' said Bryan Armour, director of ETF & passive strategies research at Morningstar. He said it's also a good time to increase bond exposure with TIPS ETFs, or consider alternatives like gold funds. 'No one knows what's going to happen next, and there's a lot that's up in the air economically right now.' READ ALSO: Want a Crypto 401(k)? The DOL Isn't Standing in the Way Anymore and Why Thrivent Wants to Hire Nearly 600 Advisors this Year With markets recovering from earlier losses and the major indexes flat year-to-date, investors have piled into equity ETFs. Stock-based funds in the most popular ETF segments have taken in nearly $200 billion so far in 2025, according to data platform Trackinsight. While passive funds remain dominant in terms of flows and total assets, active ETFs are moving the needle, accounting for nearly 40% of inflows so far this year. The biggest equity fund winner is the Vanguard S&P 500 ETF (VOO), which has seen roughly $65 billion in inflows so far this year. In February, it overtook State Street's SPDR S&P 500 ETF Trust (SPY) as the largest fund. 'Two years ago, that would've been a single-year record,' Armour told Advisor Upside. 'Even if we stopped in May, it would be the second-largest year of inflows ever for VOO. That's nuts.' In fixed income, investors are playing it safe, favoring ultra-short bonds and T-bill ETFs that offer lower credit and interest rate risk amid ongoing market choppiness, Armour said. Risky Bet? The previous high for ETF inflows by this point in the year was in 2021, at just over $370 billion — followed by a downturn in 2022. Could history repeat? Armour said ETF inflows alone don't pose a systemic risk. 'With the amount of money in bonds, stocks, mutual funds, hedge funds, and private equity, ETF inflows aren't going to tip the scales to the point where assets are overpriced,' he told Advisor Upside. This post first appeared on The Daily Upside. To receive financial advisor news, market insights, and practice management essentials, subscribe to our free Advisor Upside newsletter.
Yahoo
30-05-2025
- Business
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23-Year-Old Won $137K On A Scratch-Off And Thinks He'll Retire by 40 —The Plan? Stocks, Gold, A New Car, And a Little 'Fun Money' on the Side
Retiring by 40 might sound like a pipe dream—unless you're 23, just hit a scratch-off for six figures, and think the stock market is about to do you a solid. That's the situation one young man shared on Reddit's r/MiddleClassFinance subreddit after his fiancée won a $200,000 lottery prize. Post taxes, they're sitting on $137,500—and they already have a plan. "We're planning on putting roughly $50K into the S&P 500. $20K into some sort of high-yielding savings account or another investment instrument. $10K on silver and gold," he wrote. The rest? A new car, bathroom remodel, dental surgery for their dog, and a little "fun money to enjoy life." Don't Miss: Hasbro, MGM, and Skechers trust this AI marketing firm — Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — The goal? "Financial freedom by our 30–40s." And if you've been around personal finance circles, you know the phrase: The first $100,000 is the hardest. Even Charlie Munger famously said, "The first $100,000 is a b****, but you gotta do it." So does that early head start mean they're on the road to financial independence? Reddit had opinions. Lots of them. "Invest it in a low-cost index fund like [Vanguard S&P 500 ETF (NYSE: VOO)] and forget about it," one user advised. "Let your money work for you while you keep working." Another chimed in saying: "You'd be surprised how fast money can go. $100K is not life-changing unless you put it into VOO or something equivalent and don't touch it until you reach your retirement number." Trending: Maximize saving for your retirement and cut down on taxes: . But others were quick to hit the brakes. "If they invest $100K for the next 20 years at 10% a year, they'll have about $800K," one wrote. "Not exactly financially free in your early 40s." Another walked them through a more detailed strategy: "Open a Fidelity account. Move the $100K. Actually invest it. Set $450/month to VOO. If you live below your means, you may be able to coastFIRE." But the warnings came just as fast. "My grandmother passed away. Most of her kids got $100K checks... gone within 2–3 years. They basically lived on it and weren't replacing it." Some saw the post as grounded. Others saw fantasy. One user questioned if the couple even fit the sub's "middle class" theme, since the original poster is military and said his fiancée doesn't currently work. "With how young they are, I'd be surprised if they were actually at middle-class income," a commenter said. Still, whether you think it's wise or wildly optimistic, the idea that $137,000 could launch an early retirement lit a fire. And if there's one thing the internet never scrolls past, it's a 23-year-old casually mapping out financial freedom before most people pay off their student loans. But let's talk to Western & Southern Financial Group, the "golden rule" of early retirement is to have 25 times your annual expenses saved. That's the idea behind the 4% rule: you withdraw 4% of your portfolio each year and it lasts around 30 years. But if you're retiring at 40? You're aiming to cover 50+ years—and you'll probably need more. Let's say you expect to live on $50,000 a year. You'd need at least $1.25 million by the time you hit 40. And that's in today's dollars. Because inflation? It doesn't care about your scratch-off dreams. At just a 3% inflation rate, that same $50,000 lifestyle could cost you closer to $90,000 a year by the time you're 60. So when Redditors raised eyebrows, it wasn't just about the car or gold—it was about whether this windfall could seriously stretch over five decades of "freedom." That's the question that lingers: is this couple being bold—or just banking too much on beginner's luck? Read Next: Invest where it hurts — and help millions heal:. Inspired by Uber and Airbnb – Deloitte's fastest-growing software company is transforming 7 billion smartphones into income-generating assets – Image: Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? This article 23-Year-Old Won $137K On A Scratch-Off And Thinks He'll Retire by 40 —The Plan? Stocks, Gold, A New Car, And a Little 'Fun Money' on the Side originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
