Is Vanguard S&P 500 ETF a good investment?
The Vanguard S&P 500 ETF (VOO -0.23%) is a top choice for most index fund investors. Even Warren Buffett recommends it above any other investment. There's a good reason for that. Its low expense ratio and tight index tracking make it a top choice for anyone looking to match the returns of the S&P 500.
ETF | Ticker | Annualized 5-year return |
---|---|---|
iShares Core S&P 500 ETF | IVV | 15.65% |
Vanguard S&P 500 ETF | VOO | 14.72% |
SPDR S&P 500 ETF Trust | SPY | 14.60% |
Investing in an S&P 500 fund can instantly diversify your portfolio and is generally considered less risky. S&P 500 index funds or ETFs will track the performance of the S&P 500, which means when the S&P 500 does well, your investment will, too. (The opposite is also true, of course.)
as of 03/31/2024 | 1 MONTH | 1 YEAR |
---|---|---|
VOO (Market price) | 3.19% | 29.83% |
VOO (NAV) | 3.22% | 29.85% |
BenchmarkS&P 500 Index2 | 3.22% | 29.88% |
All investments carry some risk, and Vanguard ETFs are no exception. But Vanguard is a fund provider with a reliable company history, and well-diversified ETFs tend to be safer than individual stocks.
- SPDR S&P 500 ETF Trust (SPY).
- iShares Core S&P 500 ETF (IVV).
- Vanguard S&P 500 ETF (VOO).
- SPDR Portfolio S&P 500 ETF (SPLG).
- Invesco S&P 500 Equal Weight ETF (RSP).
Invests in stocks in the S&P 500 Index, representing 500 of the largest U.S. companies. Goal is to closely track the index's return, which is considered a gauge of overall U.S. stock returns. Offers high potential for investment growth; share value rises and falls more sharply than that of funds holding bonds.
According to our calculations, a $1000 investment made in February 2014 would be worth $5,971.20, or a gain of 497.12%, as of February 5, 2024, and this return excludes dividends but includes price increases. Compare this to the S&P 500's rally of 178.17% and gold's return of 55.50% over the same time frame.
In 1980, had you invested a mere $1,000 in what went on to become the top-performing stock of S&P 500, then you would be sitting on a cool $1.2 million today.
At any given time, the spread on an ETF may be high, and the market price of shares may not correspond to the intraday value of the underlying securities. Those are not good times to transact business. Make sure you know what an ETF's current intraday value is as well as the market price of the shares before you buy.
How much do I need to invest in Vanguard S&P 500?
How much does it cost to buy Vanguard index fund shares? Investors make an initial minimum investment — typically around $3,000 — and pay annual costs to maintain the fund, known as an expense ratio, based on a small percentage of your cash invested in the fund.
Vanguard S&P 500 UCITS ETF pays quarterly dividends. This is paid in the months of June, September, December, March. When is the next dividend from Vanguard S&P 500 UCITS ETF? The next dividend for Vanguard S&P 500 UCITS ETF is expected in June.
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification. But the number of ETFs is not what you should be looking at. Rather, you should consider the number of different sources of risk you are getting with those ETFs.
When the market cratered, investors withdrew $16.4 billion from Vanguard's index mutual funds. What accounts for remaining index mutual fund outflows? Johnson says it could be clients pulling out money because they're retiring, or because they're negatively affected by the pandemic.
While Fidelity wins out overall, Vanguard is the best option for retirement savers. Its platform offers tools and education focused specifically on retirement planning.
Vanguard's unique cost structure, the economies of scale it has achieved, and the total number of assets under management (AUM) allow it to offer its ETFs at the lowest cost available in the market. We've listed 10 of the firm's cheapest ETFs by their expense ratio.
The Vanguard S&P 500 ETF (VOO -0.51%) is a top choice for most index fund investors. Even Warren Buffett recommends it above any other investment. There's a good reason for that. Its low expense ratio and tight index tracking make it a top choice for anyone looking to match the returns of the S&P 500.
There are typically 4 dividends per year (excluding specials), and the dividend cover is approximately 1.0.
Vanguard S&P 500 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VOO is a great option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market.
Is Investing in the S&P 500 Less Risky Than Buying a Single Stock? Generally, yes. The S&P 500 is considered well-diversified by sector, which means it includes stocks in all major areas, including technology and consumer discretionary—meaning declines in some sectors may be offset by gains in other sectors.
Is it better to buy Vanguard ETFs through Vanguard?
Investors can buy and sell Vanguard mutual funds and ETFs through any number of brokerage firms and financial advisors. If you buy directly through Vanguard, you may benefit from lower fees, better customer service, and additional product research.
Fund (ticker) | 5-year annual returns | Expense ratio |
---|---|---|
Vanguard S&P 500 ETF (VOO) | 14.5% | 0.03% |
SPDR S&P 500 ETF Trust (SPY) | 14.5% | 0.095% |
iShares Core S&P 500 ETF (IVV) | 14.5% | 0.03% |
Schwab S&P 500 Index (SWPPX) | 14.5% | 0.02% |
Discount Rate | Present Value | Future Value |
---|---|---|
6% | $1,000 | $3,207.14 |
7% | $1,000 | $3,869.68 |
8% | $1,000 | $4,660.96 |
9% | $1,000 | $5,604.41 |
The result is the number of years, approximately, it'll take for your money to double. For example, if an investment scheme promises an 8% annual compounded rate of return, it will take approximately nine years (72 / 8 = 9) to double the invested money.
The S&P 500 has been a profitable investment over every rolling 16-year period in history, and the index returned 1,710% over the last three decades. History says $300 invested monthly in an S&P 500 index could grow into $164,100 over 18 years.
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