Is it Time to SELL Your S&P 500 Index Fund?!

Comments (34) on “Is it Time to SELL Your S&P 500 Index Fund?!”

1. Great points 👍 Definitely need some other ETFs in your portfolio with it. I went with SPYG in my Growth Portfolio. SPYG keeps outperforming SPY and VOO year after year. Also has a lower expense fee 💰💰💰

   1. Lower expense fee than what?

2. Im 22 and just opened roth and invested a bit in FXAIX a month ago. I’ve been thinking about ETFs but im unclear whether ETFs are better suited in a regular brokerage account or a Roth.

   1. Check my post above, I listed the strategy I’m going with (I’m also with FXAIX and Fidelity.)

      ETFs are better for brokerage accounts (or if you just like to know what price you’ll be paying during the trading day.) Mutual funds (including index funds) are better in a Roth, since you’d get hit with a fair amount of taxes with all the dividends and capital gains distributions that a lot of them offer during the year (definitely applies to FXAIX.)

      ETFs don’t have quite as bad of a tax hit as mutual funds, so more “tax efficient” to keep in a taxable brokerage account.

   2. FXAIX is a great place to put your money! I’m also with Fidelity.

3. Only thing to note is that the same 5 companies may not always carry the same weight in the index. It does periodically change. (Re-indexed). But there is risk there, no doubt.

   1. There is “risk” everywhere. The idea of index funds is to keep the dump people from fucking up their chances of a quality retirement by mismanaging hand picked stocks themselves

4. Great video and it makes sense! Do you think this issue would apply to pretty much any “cap-weighted” large cap fund/etf? Since the typical threshold for large cap is say 10+ billion, and the largest few companies are over 1+ trillion (and growing to infinity) the potential gap is widening and may cause this …. vs a small cap or mid cap fund/etf that actually has defined the top cap thresholds.

5. Thank you for the great video, Joe! I have VOT and VCR for a bit more diversification 🙂

6. Wasn’t it always cap weighted throughout the S&P History? Yet it did good.

7. VUG, MTUm, QQQ, VTI. If you want equal cap there are ETFs that do that they have performed poorly compared to the cap weighted funds.

8. What’s your take on Vanguard’s government bonds ETFs? We know the average long-term government bond distributes a 1-digit return per year, yet we see average annual returns as high as 40% on several bond funds. Does that mean that investor’s exuberance runs up the return 400% or even higher? Or are these govt. bond funds just watered stock and severely inflated due to quantitative easing?

9. Are there any good equal weighted index funds?

10. As companies do bad, arent they dropped from the s&p. So in theory it will only hold winners. That’s why in the history of the s&p they’ve averaged a return of 10% more or less. In general if you hold the s&p you’re betting on the economy of America. And I think that’s a good bet. Just my .02.

    1. I put every penny of my stimulus and FPUC in the market for that very reason. Betting on the USA !

    2. Very interestingly enough I bought Occidental Petrol because it was a buffet pick. That was mid march this year. I was just returning to the market after being too poor to invest for the last few years. I see a huge upside in tesla and with a 5/1 split lf owned by this week 8/23 I think , so I sold my OXY to buy Tesla. I know it was a short term trade but it had gone up 18% so seeing a greater upside with electric than petrol , I swapped it out. Warren just dumped his holdings in OXY the end of last week !

11. I have no problem with the S&P 500 being cap weighted, since it’s kind of a gauge of the overall market, and those stocks are doing the best. The problem comes in when the “Total Market” fund is cap weighted. For example, I was recently in an online class researching index funds to buy. Most of us were in Fidelity, so I’ll go with those funds:

    FXAIX (S&P 500) and FSKAX (Total Market) – a lot of people were saying “Ok, I’ll go total market”, but when I researched them, I said: “Wait, FSKAX has the SAME top 10 holdings as FXAIX, *and* (at the time) was like 25% of the top holdings, where FXAIX was only around 22-23%.” Not very “total market”, so my strategy was (and is) to invest in FXAIX for the large cap, plus have FSMDX as my mid-cap fund, and FSSNX as my small cap fund.

    I pay a minuscule bit more in expense ratios to have 3 funds instead of just one FSKAX, *but* I also get dividends / capital gains distributions WAY more often for 3 vs the one FSKAX.

    I’m also invested in some International (FSPSX), some real estate (FSRNX, plus O – Realty Income REIT with its monthly dividend), some speciality Tech/IT (FSCSX – which has been absolutely KILLING it – check out its 1, 3, 5, and 10 year), and I just recently picked up my first growth fund (FSPGX, which is also destroying it, despite being a large cap growth fund, so there’s a bit of repetition with FXAIX.)

    So definitely don’t just stick to an S&P 500 fund – while is *is* generally well diversified, you want to be in a bunch of different sectors and markets.

    Ok, I think this was probably my 10 cents on the matter 😅 Great stuff as usual 😎

    1. I know I’m doubling up in tech, but I have a lot more than just technology in my portfolio.

    2. @Bryan Sproles Yes and as you showed, you’re doubling down in other areas too (like large cap growth). But hey, it’s your money. If you want to multiply your losses when the tech bubble bursts again like it did 20 years ago, that’s up to you.

    3. So what’s your suggestion? Just go with FXAIX, Mid cap, small cap and REIT index funds?

    4. I was mainly showing the difference between FXAIX + the mid and small cap VS. the single FSKAX total market fund. But invest into several different sectors for index funds, including International, Real Estate, etc.

       That obviously shouldn’t be the ONLY things to invest in. I’m also in some individual stocks, generally Blue Chip / Dividend Aristocrats.

    5. Bryan Sproles I see. Btw.. you invest in individual stocks in your ROTH IRA?

12. *“Index funds are just a hedge against ignorance.”*
    ~ Warren Buffet

    1. Nice , he also is not into short term trades. Buffet says don’t even think about buying if you would not hold it for a decade. Buffet and William J Oneill are the wisest investors to follow for anyone but especially blue collar folks like me

    2. He didn’t say that he said “diversification is an insurance”

13. I was just looking at this s&p 500 article and 5 growth stocks make up 20% of the fund out of 500 stocks definitely isn’t diversification

14. I think best to mix like you explain, partially in S&P 500 then various etfs (growth, dividend, value, differeny industry) for a broader range then 5 to 10 max stock picking. I am on the process of selecting my pick and start investing with long terms goal.

15. I take economist opinion with a grain of salt. Cuz they always have opinions and the majority of times they are wrong. I will just keep it simple vtsax and bonds.

16. I agree with you. Most of my portfolio is in the S&P 500 index with Vanguard, tech is hot right now and probably will be for years but there’s zero guarantee that this will be the case forever. I am willing to put my money on it not being the case.

    I diversify into VXUS, Precious metals (and a few other ETFs)

    VXUS i like because provides international exposure and Exposure to emerging markets, and small cab/med cab companies.

17. I might sell some shares. 40 years from now.

18. I don’t think Index funds should be equally weighted between all 500 companies. Why would you want to invest an equal amount of money between airlines (which are always struggling) and the big growth companies like Amazon, Google, Tesla, etc. I personally would never invest in airline stocks or certain brick and mortar retail stores.

19. Should I invest in sp index now or wait few months to see what the market do? Thinking about throwing in $10k

20. What about the fees the S&P 500 charge yearly? Doesn’t that take away from any dividend you might accumulate?

    1. Yes Yolanda. The S&P 500 does have an annual expense ratio but it is very small. .03% for a Vanguard ETF/index fund or .015% for Fidelity will not move the dial significantly. Hope that helps! THANK YOU for watching Yolanda and for leaving your $0.02 in the comments! 😎👍🏻

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