One of the habits of highly effective investors is to buy the entire US market at low-cost by acquiring exchange-traded funds (ETFs) which mirror the S&P 500.
The chart above (used with permission from Prof. Dimson) shows why. Investors have made and lost money in every one of the markets you see above; it is easier to make more and lose less in a growing market. A little over 100 years ago, the US market accounted for 15% of the world stock market. Today, it has over a half!
The subject of exchange-traded funds is complex but until recently, the Monday Morning Millionaire Program stated that the three ETFs shown below are the ones that interest us.
- SPDR S&P 500 ETF (Symbol SPY)
- iShares Core S&P 500 ETF (Symbol IVV) and
- Vanguard S&P 500 ETF (Symbol VOO)
To those three, we recently added the Guggenheim S&P 500 Equal Weight ETF (Symbol RSP) for reasons we explain in my personal portfolio report of 3/11/2019.
The habit of buying the entire US market at low-cost by acquiring exchange-traded funds (ETFs) which mirror the S&P 500 is another way of saying don’t pick stocks. It is the third of six habits of highly effective investors. As Monday Morning Millionaire Program members know, these habits are: