You frequently state that, based on the last decade, a U.S. market index Exchange-Traded Fund (ETF) which tracks the S&P 500, held in a tax-advantaged account, has been the investor’s best way for growing savings and is likely to remain so for many years. I have some dividend-paying stocks that I inherited from my mother. They are in a tax-advantaged account which has accumulated some cash as a result. What is the best way to convert these and the cash into an exchange-traded fund which tracks the S&P 500?
Monday Morning Millionaire Program Answer:
You are correct in noting the benefits of investing in a U.S. market index Exchange-Traded Fund (ETF) which tracks the S&P 500. It is as easy to match (minus a small transaction cost) as it is difficult to beat. There are several other ways of getting decent income from the stock market and a portfolio of dividend-paying stocks can be excellent.
The tax implications of changing your holdings within the present tax-advantaged account or moving into an exchange-traded fund which tracks the S&P 500 might cost you more than the benefits of so doing. Consult with a fee-only financial advisor and not a fee-based advisor. A fee-only advisor has no conflict of interest. A fee-based advisor charges commissions as well as fees. The temptation to put savers into investments which generate higher incomes for the advisor is frequently difficult to resist.