Latest news with #buyandhold
Globe and Mail
5 days ago
- Business
- Globe and Mail
Can Investing $25,000 in the S&P 500 Today and Holding On for 25 Years Make You Wealthy?
Key Points A buy-and-hold strategy can be a great way to grow your portfolio while also avoiding the temptation to chase trends and risky stocks. The S&P 500 is at record highs, and while it has historically averaged double-digit returns, investors may want to brace for the possibility of lower returns in the future. If you don't think you're on track to meet your investing goals, you may want to consider investing more money or focusing on growth stocks. 10 stocks we like better than SPDR S&P 500 ETF Trust › For not only years, but decades, tracking the S&P 500 has been a reliable way to generate significant stock gains. Since the index tracks the best stocks on the U.S. markets, it offers a great low-risk way to ensure you're positioned for long-term growth. But what if you invested a lump sum of $25,000 into an exchange-traded fund (ETF) that tracks the S&P 500, such as the SPDR S&P 500 ETF (NYSEMKT: SPY), and simply held on for 25 years? Could that be enough to make you wealthy and allow you to retire comfortably? Let's take a look. How much could your portfolio be worth after 25 years? A buy-and-hold strategy can be a good way to ensure your portfolio rises in value. Sometimes, just leaving your portfolio alone can be the best thing you can do for your future. The temptation to chase the latest trends or hot stocks can end up doing more harm than good and derail your investment goals and objectives. If you have a diverse portfolio or if you are invested in the SPDR S&P 500 ETF, a set-it-and-forget-it approach can be a great one to consider deploying. Over time, your investment should rise in value, though there's no guarantee stocks will rise or be up when you need the money. The variable that can have the most significant effect on your overall returns is unfortunately the one that is also nearly impossible to predict: your average annual return. And with the S&P 500 around all-time highs right now, it may be wise to assume that its average returns from here on out may trend a bit lower than its historical average of around 10%. Here's how a $25,000 investment in the SPDR S&P 500 ETF might look like after a period of 25 years, if the average annual return is between 7% and 9%. Year 7% Growth 8% Growth 9% Growth 5 $35,064 $36,733 $38,466 10 $49,179 $53,973 $59,184 15 $68,976 $79,304 $91,062 20 $96,742 $116,524 $140,110 25 $135,686 $171,212 $215,577 Calculations and table by author. A $25,000 investment would grow significantly over the years under this scenario, but with potentially below-average returns, you're not likely to end up with a boatload of money to consider yourself rich, or enough to retire with after 25 years. Your investment might end up growing to more than a couple of hundred thousand dollars and strengthen your overall financial position, but if your goal is to end up wealthy, i.e., having a portfolio worth over $1 million, then this strategy may not be sufficient to get you there. What you can do if you don't think you're on track to hit your goals If you're worried you may not reach your investing goals, there are things you can do to try to achieve better results. Investing more money, even if it's on a monthly basis, can be a way to slowly pad your portfolio's balance over time, and allow more money to be compounded over the years. And the more you invest, the quicker that your gains will accumulate. If that's not an option, what you may also want to consider is focusing more on growth stocks, rather than simply mirroring the market. By investing in tech stocks or companies with promising growth prospects, you may have better chances of outperforming the market and achieving better-than-average returns. This can involve more research and be more time-consuming, but it's an example of where picking individual stocks or simply focusing on ETFs that track growth stocks can be a better option than mirroring the S&P 500. It adds more risk into the equation, but the payoff can be worthwhile in the end. Regardless of what approach you decide to take, it's a good idea to revisit your portfolio on a regular basis to see how you're doing and if you need to recalibrate and adjust your holdings. Should you invest $1,000 in SPDR S&P 500 ETF Trust right now? Before you buy stock in SPDR S&P 500 ETF Trust, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SPDR S&P 500 ETF Trust 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 $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025
Yahoo
5 days ago
- Business
- Yahoo
Can Investing $25,000 in the S&P 500 Today and Holding On for 25 Years Make You Wealthy?
Key Points A buy-and-hold strategy can be a great way to grow your portfolio while also avoiding the temptation to chase trends and risky stocks. The S&P 500 is at record highs, and while it has historically averaged double-digit returns, investors may want to brace for the possibility of lower returns in the future. If you don't think you're on track to meet your investing goals, you may want to consider investing more money or focusing on growth stocks. 10 stocks we like better than SPDR S&P 500 ETF Trust › For not only years, but decades, tracking the S&P 500 has been a reliable way to generate significant stock gains. Since the index tracks the best stocks on the U.S. markets, it offers a great low-risk way to ensure you're positioned for long-term growth. But what if you invested a lump sum of $25,000 into an exchange-traded fund (ETF) that tracks the S&P 500, such as the SPDR S&P 500 ETF (NYSEMKT: SPY), and simply held on for 25 years? Could that be enough to make you wealthy and allow you to retire comfortably? Let's take a look. How much could your portfolio be worth after 25 years? A buy-and-hold strategy can be a good way to ensure your portfolio rises in value. Sometimes, just leaving your portfolio alone can be the best thing you can do for your future. The temptation to chase the latest trends or hot stocks can end up doing more harm than good and derail your investment goals and objectives. If you have a diverse portfolio or if you are invested in the SPDR S&P 500 ETF, a set-it-and-forget-it approach can be a great one to consider deploying. Over time, your investment should rise in value, though there's no guarantee stocks will rise or be up when you need the money. The variable that can have the most significant effect on your overall returns is unfortunately the one that is also nearly impossible to predict: your average annual return. And with the S&P 500 around all-time highs right now, it may be wise to assume that its average returns from here on out may trend a bit lower than its historical average of around 10%. Here's how a $25,000 investment in the SPDR S&P 500 ETF might look like after a period of 25 years, if the average annual return is between 7% and 9%. Year 7% Growth 8% Growth 9% Growth 5 $35,064 $36,733 $38,466 10 $49,179 $53,973 $59,184 15 $68,976 $79,304 $91,062 20 $96,742 $116,524 $140,110 25 $135,686 $171,212 $215,577 Calculations and table by author. A $25,000 investment would grow significantly over the years under this scenario, but with potentially below-average returns, you're not likely to end up with a boatload of money to consider yourself rich, or enough to retire with after 25 years. Your investment might end up growing to more than a couple of hundred thousand dollars and strengthen your overall financial position, but if your goal is to end up wealthy, i.e., having a portfolio worth over $1 million, then this strategy may not be sufficient to get you there. What you can do if you don't think you're on track to hit your goals If you're worried you may not reach your investing goals, there are things you can do to try to achieve better results. Investing more money, even if it's on a monthly basis, can be a way to slowly pad your portfolio's balance over time, and allow more money to be compounded over the years. And the more you invest, the quicker that your gains will accumulate. If that's not an option, what you may also want to consider is focusing more on growth stocks, rather than simply mirroring the market. By investing in tech stocks or companies with promising growth prospects, you may have better chances of outperforming the market and achieving better-than-average returns. This can involve more research and be more time-consuming, but it's an example of where picking individual stocks or simply focusing on ETFs that track growth stocks can be a better option than mirroring the S&P 500. It adds more risk into the equation, but the payoff can be worthwhile in the end. Regardless of what approach you decide to take, it's a good idea to revisit your portfolio on a regular basis to see how you're doing and if you need to recalibrate and adjust your holdings. Should you invest $1,000 in SPDR S&P 500 ETF Trust right now? Before you buy stock in SPDR S&P 500 ETF Trust, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and SPDR S&P 500 ETF Trust 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 $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Can Investing $25,000 in the S&P 500 Today and Holding On for 25 Years Make You Wealthy? 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
22-06-2025
- Business
- Yahoo
Guide to dollar-cost averaging: Use this strategy to build wealth over time
Dollar-cost averaging is a popular investing strategy that entails buying new investments at regular intervals, such as once a month. If you have a 401(k), you're already dollar-cost averaging with every paycheck. But you can also use the practice in a typical brokerage account, individual retirement account (IRA) or any other type of investing account. You can implement the strategy manually or set your brokerage account to automatically invest at regular intervals. Dollar-cost averaging is one of the easiest techniques to boost your returns without taking on extra risk, and it's a great way to practice buy-and-hold investing. Dollar-cost averaging can be especially beneficial for people who want to set up their investments and deal with them infrequently. Here's what dollar-cost averaging is and how to use it to maximize your investment gains. Dollar-cost averaging is the practice of putting a fixed amount of money into an investment on a regular basis, such as monthly or even bi-weekly. Over time, the strategy allows you to spread out when you buy — which means you'll do so at market lows and highs — averaging your purchase prices. Because you're always investing the same amount of money, when prices are lower, you'll buy more shares, and when they're higher, you'll buy fewer shares. It's the opposite of timing the market, which entails trying to predict in which direction prices are headed next risking losses if stock prices fall. By setting up a regular buying plan when the markets (and you) are calm, you'll avoid this psychological bias and take advantage of falling stock prices when everyone else becomes scared. If you have a 401(k) retirement account, you're already practicing dollar-cost averaging, by adding to your investments with each paycheck. You're also already using the strategy if you reinvest your dividends, since those payouts are invested back into the market at regular intervals, likely each quarter. Imagine an employee who earns $3,000 each month and contributes 10 percent of that to their 401(k) plan, choosing to invest in an S&P 500 index fund. Because the price of the fund moves around, the number of shares purchased isn't always the same, but each month $300 is invested. The table below shows this example over a 10-month period. Month Contribution Price of fund Shares bought Shares held Total value 1 $300.00 $100.00 3 3 $300.00 2 $300.00 $97.50 3.08 6.08 $592.80 3 $300.00 $101.30 2.96 9.04 $915.75 4 $300.00 $85.45 3.51 12.55 $1,072.40 5 $300.00 $91.23 3.29 15.84 $1,445.08 6 $300.00 $93.20 3.22 19.06 $1,776.39 7 $300.00 $96.50 3.11 22.17 $2,139.41 8 $300.00 $100.54 2.98 25.15 $2,528.58 9 $300.00 $101.43 2.96 28.11 $2,851.20 10 $300.00 $105.00 2.86 30.97 $3,251.85 You can see that the value of the employee's investments went up 8.4 percent on their $3,000 in total contributions, despite the fund only increasing 5 percent over the period. That's because the employee was able to buy a greater number of shares when the price was lower, taking advantage of the market volatility. MORE: Bankrate's list of the best online brokers It can depend on your specific situation, but dollar-cost averaging has been a successful way for many people to invest over time. The question is about whether you should time your purchases based on market conditions or just buy consistently over time using the dollar-cost averaging method. Timing the market has proven to be very difficult and most people are better off with a consistent investment plan. Another issue is that most people are investing money as they earn it, likely through a workplace retirement plan such as a 401(k). Dollar-cost averaging makes sense here because you're investing what you can as soon as it's available to be invested. However, if you inherited a large sum of money, say $100,000, you wouldn't want to spread that out to be invested over years. In that scenario, it's best to get it invested relatively quickly, but you could still spread out purchases over a few months to take advantage of potential volatility. Dollar-cost averaging can make sense for a lot of investors, but it does come with some downsides: Waiting to buy can mean missing opportunities. In a market that generally rises over time, you'll likely be better off being fully invested as soon as possible. But because most people are saving and investing as they earn money, dollar-cost averaging is the next best option. Your investment choices determine performance. If you're dollar-cost averaging into a poor investment, the strategy in which you bought in (dollar-cost averaging) won't be able to boost your investment's performance. The approach works best with broad-based funds such as an S&P 500 index fund, which has performed well over long time periods. There are two ways that you can set up dollar-cost averaging for your account: manually and automatically. If you opt for the manual route, you'll just pick a regular date (monthly, bi-weekly, etc.) and then go to your broker, buy the stock or fund and then you're done until the next date. If you opt to go the automatic route, it requires a little more time upfront, but it's much easier later on. Plus, it will be easier to continue buying when the market declines, since you don't have to act. While setting up your automatic buying may seem like a chore, it's actually easy. Almost any broker can set up an automatic buying plan, so use Bankrate's reviews of the major players to find brokers that provide other features such as great customer service and educational tools. Here are the steps to make dollar-cost averaging fully automatic. First, you'll want to determine what you're buying. Do you want to buy stock? Or will you go with an exchange-traded fund (ETF) or mutual fund? If you opt to buy an individual stock, it's more likely to fluctuate significantly than a fund is. But it may be difficult to find a brokerage that allows you to buy stocks on autopilot. If you buy a fund, it should fluctuate less than an individual stock and it's also more diversified, so your portfolio likely won't drop as much if any single stock in the fund declines a lot as it would if you only invested in that stock. Less-experienced investors usually opt for a fund, and some of the most diversified funds are based on the Standard & Poor's 500 index. This index includes hundreds of companies across all major industries, and it's the standard for a diversified portfolio of companies. If you want to buy an S&P index fund, here are some of the top choices. In either case, you'll need to note the ticker symbol for the security; that's the short-hand code for the stock or fund. So, you've made your choice of investment. Now see if your broker will allow you to set up an automatic purchase plan for that investment. If so, then you're ready to move on to the next step. However, some brokers allow you to set up an automatic plan only with mutual funds. In that case, you might consider opening another brokerage account that allows you to do exactly what you want. There are other solid advantages to having multiple brokerage accounts, too, and you can usually get a lot of value by having multiple accounts. Now that you've got a broker who can execute your automatic trading plan, it's time to figure out how much you can regularly invest. With any kind of stock or fund, you want to be able to leave your money in the investment for at least three to five years. Since stocks can fluctuate a lot over short periods, try to allow the investment some time to grow and get over any short-term declines in price. That means you'll need to be able to live only on your uninvested money during that time. So starting with your monthly budget, figure how much you can devote to investing. Once you have an emergency fund in place, how much can you invest and not need? Even if it's not a lot at first, the most important point is to begin investing regularly. Dollar-cost averaging is now cheaper than ever, since all major brokers now charge no commissions on stock and ETF trades and the best brokers for mutual funds allow you to skip the fees for thousands of mutual funds. That means you really can start with any amount of money and begin building your nest egg. You can set up the automatic trading plan at your broker using the ticker symbol for the stock or fund, how much you want to purchase on a regular basis and how often you want the trade to execute. The exact process for setting this up varies by broker, but these are the basics that you'll need in any case. If you have further questions, your broker can help. And if your stock or fund pays dividends, it can be a good time to set up automatic dividend reinvestment with your broker. Any cash dividend will be used to purchase new shares, and you can often even buy fractional shares — putting the whole value of the dividend to work, rather than having it sit for a long time in cash earning little or next to nothing. So even as soon as the next dividend, your dividend will be earning dividends. MORE: Bankrate's list of the best robo-advisors Dollar-cost averaging is a simple way to help reduce your risk and increase your returns, and it takes advantage of a volatile stock market. If you set up your brokerage account to buy stocks or funds automatically and regularly, then you can sit back and do the things you love, rather than spend your time investing. In investing, you can often get better results with less effort. Note: Bankrate's Brian Baker and Mallika Mitra contributed to an update of this article. 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
Forbes
14-06-2025
- Business
- Forbes
The 6 Best Vanguard Index Funds For A Buy-And-Hold Portfolio In 2025
A buy-and-hold portfolio built with Vanguard funds can be cost-efficient, diversified and ... More profitable. Trying to predict where the market's headed amid geopolitical unrest and ever-changing tariff policies can be exhausting. Fortunately, you don't have to predict the future to make money investing. A diversified buy-and-hold portfolio plus a good dose of patience can help you reach your wealth goals without timing the market. Vanguard funds are good candidates for buy-and-hold portfolios because they cover popular market segments, and many have low expense ratios. Whether you want a simple two-fund portfolio or something more complex, one or more of the six funds on this list can provide the diversified exposure you need. The table below introduces six Vanguard funds for the buy-and-hold investor. The first two funds, VTI and VOO, provide overlapping exposure to domestic stocks. Most investors will choose one of them as a core, anchor position. The other four funds provide complementary exposure for a well-diversified portfolio. Some of these funds are also available as Vanguard mutual funds, which you may have access to in your 401(k). The Vanguard Total Stock Market ETF represents the entire U.S. stock market, from small to large companies. The fund uses a sampling approach to replicate market returns. This helps keep costs lower versus owning every stock available. Even so, VTI holds more than 3,500 stocks and provides exposure to all economic sectors. VTI is an efficient pick for whole market exposure with its low expense ratio and low tracking error. Tracking error is the performance difference between the fund and its underlying index. VTI's tracking error on a NAV basis has historically been one or two basis points. As a core stock holding, you could weight VTI as high as 90%—assuming you can handle risk and you're not investing in other stock funds. More conservative investors would allocate 40% to 80% to VTI, depending on what else is in the portfolio. VTI's average annual return over the past 10 years is 12.14%. The fund does pay quarterly dividends with a 30-day SEC yield of 1.24%. The Vanguard S&P 500 ETF invests in the S&P 500, which includes the largest and most successful U.S. public companies. This fund is a popular choice for novice and experienced investors. According to ETF Database, VOO is the largest U.S. ETF as measured by assets under management. Compared to VTI, VOO is more heavily concentrated on big tech stocks. You'd choose VOO as your core holding if you believe those mega-cap companies will continue their historic growth trajectories. In June 2024, a Morgan Stanley report noted that the Magnificent Seven stocks drove more than half of the S&P 500's 26.3% gain in 2023. Those stocks—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—have been less dominant in 2025, but it's hard to count them out. VOO allocation guidelines are the same as VTI's. Your exposure can range from 40% to 90%, depending on the rest of your portfolio and your risk tolerance. VOO has returned 12.81% annually on average over the past decade. The fund pays quarterly dividends, with a 30-day SEC yield of 1.24%. Vanguard Small-Cap Value ETF invests in more than 800 domestic small-cap companies. Industrials and financials are the top sectors in the portfolio, followed by consumer discretionary and real estate. Small caps suit a buy-and-hold portfolio because they have good growth potential and some volatility. Longer holding periods smooth out the rough edges and average to positive returns. Small-cap returns have outperformed large caps in multi-year cycles, but not since 2011. Analysts from investment firm Wellington Management and Chartered Financial Analyst Daniel Fang believe small caps will take the lead again soon. An 8% to 10% small-cap allocation is an appropriate starting point for buy-and-hold investors. Remember to consider the small-cap exposure you already have in a total market fund like VTI. VBR has delivered an average annual return of 7.84% since May 2015. The fund pays quarterly dividends with a 30-day SEC yield of 2.1%. The Vanguard Total International Stock ETF invests in more than 8,000 foreign large-cap companies. The fund tracks the FTSE Global Call Cap ex US Index, which includes stocks from emerging and developed markets. Investing outside the U.S. can provide access to lower valuations and potentially higher growth potential. There can be more volatility, too, which underscores the importance of diversification and long holding periods. Buying and holding a broad international fund like VXUS checks both boxes. Charles Schwab recommends an international stock allocation of 5% to 40%, but many investors will opt for 10% to 20%. The David Swensen Portfolio uses a 15% allocation. Swensen formerly managed Yale University's endowment fund, famously growing it from $1 billion to $31 billion. VXUS has produced an average annual return of 5.6% since May of 2015. The Vanguard Real Estate Fund offers growth and income potential through its real estate investment trusts (REIT) holdings. The fund tracks the MSCI US Investable Market Real Estate 25/50 index. The index includes about 150 small, mid and large-cap REITs, and the top holding comprises less than 7% of the portfolio. REITs often pay high dividend yields because they distribute 90% of their income to shareholders. A related perk is that REITs do not pay corporate taxes on the distributed income. So REIT investors sidestep the double taxation that occurs with non-REIT companies—when profits are taxed at the corporate level and again with shareholder dividends. A REIT fund also provides access to the real estate market, which typically doesn't move in lockstep with stocks. This provides a nice diversification benefit, alongside good returns. The FTSE Nareit All REIT index produced a pretax average annual return of 11.1% between 1972 and 2024, according to data provided by the National Association of Real Estate Investment Trusts (Nareit). A Morningstar analysis concludes that a portfolio with 51% stocks, 34% bonds and 15% REITs outperformed a 60-40 split between stocks and bonds more than half the time between 1976 and 2022. A typical REIT allocation would be 5% to 15%. VNQ pays quarterly distributions. The total distributions over the past 12 months were $3.63, which equates to a yield of about 4%. The Vanguard Total Bond Market ETF invests in investment-grade, intermediate-term U.S. bonds. Tax-exempt bonds and TIPS are excluded. Treasury bonds comprise nearly half of the portfolio, with government mortgage-backed securities and corporate bonds making up another 44%. Bonds provide income and relative price stability, two traits that complement stocks. Your allocation to this fund should depend on your risk tolerance. If you don't like risk, opt for higher bond exposure—say, 50% of your portfolio. If you are comfortable with the volatile nature of stocks, your bond exposure could be as low as 10%. BND pays monthly distributions with a 30-day SEC yield of 4.47%. Bottom Line A buy-and-hold portfolio built with Vanguard funds can be cost-efficient, diversified and profitable. Start by setting target allocations for different asset types—from large caps to REITs and bonds—based on your risk tolerance. Then plug matching funds into your allocation formula and wait for your returns to build over time.
