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.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

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

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.

Key Points

• A fund such as SPDR S&P 500 ETF can be a good default investing option for all types of investors.

• By tracking the S&P 500 index, you can confidently grow your portfolio while keeping your risks relatively low over the long haul.

• 10 stocks we like better than SPDR S&P 500 ETF Trust ›

When you think about investing for the long term and creating a portfolio worth over $1 million, you may think it's too difficult to do or that it might require a lot of money. But if you have many years to go before you retire, then a slow-and-steady approach can work, where your contributions can be more modest. Through the effects of compounding, they can result in a significant portfolio balance later on.

If you have 34 investing years to go before you retire, it's possible to create a portfolio worth $1 million by saving just $10 per day and without having to take on significant risks along the way. Here's how you can accomplish that.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Invest in a fund that tracks the S&P 500

The S&P 500 index is a collection of the leading 500 companies on U.S. exchanges. It allows you to gain broad exposure to the overall market as it includes stocks from a wide range of sectors and industries. The breadth and depth of the index effectively make it a good gauge of the overall stock market and how it is performing.

There are many exchange-traded funds (ETFs) which enable you to mirror and track the index. A popular one is the SPDR S&P 500 ETF (NYSEMKT: SPY). With a low expense ratio of 0.0945%, the fees that the fund charges aren't significant, and they won't prevent you from earning a great return. Historically, the S&P 500 has grown by an average of 10% per year. Mixed in to that are some bad years, but over the long haul, tracking the index has been an effective and easy way for investors to grow their wealth.

Invest regularly and watch that balance grow

You don't have to actually invest every day for this strategy to work. Instead, you can pool your daily savings and invest every week or perhaps every month. The goal is to make the process consistent but also not feel like a chore to the point where it may be difficult to keep up with it. If you're setting aside $10 per day to invest in stocks, that's the equivalent of $70 per week.

Let's assume that you decide to go with investing that money every week. If the SPY ETF grows by an average of 10% per year, here's how your portfolio balance might look after a period of 30 years.

Year	10% Growth Rate
30	$693,942
31	$770,683
32	$855,486
33	$949,199
34	$1,052,759
35	$1,167,198

Calculations and table by author.

You can see that by year 34, your balance would grow to more than $1 million under these assumptions. Your actual returns, however, will vary, and that will affect the size of your portfolio. But setting aside just $10 per day can be a way to set yourself up for significant gains in the long run. This is why investing for the long term can make it easy to minimize your risk while enabling you to build up a large portfolio balance.

Even if you're not familiar with investing or don't know what to invest in, putting money on a regular basis into an S&P 500 ETF such as SPY can be a good option. It'll grow your portfolio steadily and allow you to benefit from the market's overall growth. Rather than trying to beat the S&P 500 and pick individual stocks like many fund managers struggle to do, you can simply mirror it, and that can set you up for success.

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 $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,010,880!*

Now, it’s worth noting Stock Advisor’s total average return is 1,047% — 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 7, 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.

Key Points

• ETFs that have tracked the S&P 500 have always been popular.

• However, with the index getting top-heavy, BlackRock introduced two ETFs to help investors remain invested in the S&P 500 with less megacap exposure.

• After a closer look, it may be best to stick to the original.

• These 10 stocks could mint the next wave of millionaires ›

The largest and most popular exchange-traded funds (ETFs) are those that track the performance of the S&P 500. In fact, the three largest ETFs as measured by assets under management are all ones that mimic the performance of this benchmark index. These funds include the Vanguard S&P 500 ETF (NYSEMKT: VOO), the SPDR S&P 500 ETF Trust (NYSEMKT: SPY), and the iShares Core S&P 500 ETF (NYSEMKT: IVV).

However, some investors have raised concerns about the current heavy concentration of megacap stocks that now dominate the S&P 500. As of July 9, the S&P 500's top three holdings of Nvidia, Microsoft, and Apple made up over 20% of its holdings, while its top 10 holdings represented 38% of the index. With megacap stocks dominating the S&P 500, BlackRock (NYSE: BLK) introduced a couple of new ETFs to let investors invest in the index without the megacap exposure.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

In April, the company launched the iShares S&P 500 3% Capped ETF (NYSEMKT: TOPC), while earlier this month it introduced the iShares S&P 500 ex Top 100 ETF (NYSEMKT: XOEF). The former ETF tracks the performance of the S&P 500 index, but caps each holding's weighting at a maximum of 3%. For stocks that have a weighting above 3% in the S&P 500, the excess weight is redistributed to companies that have not yet reached the 3% cap. Currently, only its top five holdings have a weighting of 3% or slightly above.

The iShares S&P 500 ex Top 100 ETF, meanwhile, tracks the S&P 500 performance excluding the 100 largest stocks, better known as the S&P 100. BlackRock promotes using the ETF in conjunction with the iShares S&P 100 ETF (NYSEMKT: OEF), so that investors can balance their megacap exposure as they want.

Is it better to stick with an S&P 500 ETF or one of these new BlackRock ETFs?

The recent top heaviness of the S&P 500, especially among megacap technology names, has drawn a lot of attention. As such, it's not surprising that a firm like BlackRock is looking to give investors some alternatives to keep them invested in the index, but with a little less exposure to these megacap tech stocks.

However, these funds don't have much of a track record and come with higher expense ratios. The iShares S&P 500 ex S&P 100 ETF has an expense ratio of 0.2%, while the iShares S&P 500 3% Capped ETF is at 0.15%, although a fee waiver will bring it down to 0.09% until April 3, 2026. That compares to only 0.03% for the Vanguard 500 S&P ETF, which is the most widely held ETF.

The Vanguard 500 S&P ETF, meanwhile, also has a strong, long-term track record. The ETF has generated an average annualized return of 16.6% over the past five years and 13.6% over the past 10 years, as of the end of June.

Arguably, the S&P 500's strong performance over the years stems directly from the index not capping the weighting of its holdings. As a market-cap-weighted index, it lets the best and strongest companies grow to become an ever-increasing percentage of the index. Ultimately, it is these mega-winners that power the market.

A J.P. Morgan study looking at stocks in the Russell 3000, which is comprised of the 3,000 largest U.S. stocks, between 1980 to 2020, found that most stocks underperformed the index, and that it was these mega-winning stocks that were responsible for most of the market's gains. In fact, it found that two-thirds of stocks underperformed the index during this period, while 40% of stocks had negative returns.

As such, while it may sound tempting to reduce megacap exposure, I think the way the S&P has been set up is why it performs so well in the first place. A coach isn't going to want to limit their starters' minutes in an important game or sit them on the bench if they don't have to, and neither should investors look to do this when it comes to investing.

As such, I'd stick to an S&P 500 ETF like the Vanguard 500 S&P ETF, and just use a consistent dollar-cost averaging strategy.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,047%* — a market-crushing outperformance compared to 180% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

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*Stock Advisor returns as of July 7, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. Geoffrey Seiler has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Apple, JPMorgan Chase, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key Points

• Buffett's Berkshire Hathaway portfolio includes only one ultra-high-yield stock.

• However, his "secret portfolio" is loaded with ultra-high-yielders.

• The best of the bunch has increased its dividend for 30 consecutive years and has solid growth prospects.

Warren Buffett is known as a value investor, not as an income investor. However, that doesn't mean the "Oracle of Omaha" doesn't own stocks that many income investors would find highly attractive.

You might be surprised that Buffett even has positions in nine ultra-high-yield dividend stocks. By the way, the threshold used for a dividend yield to qualify as "ultra-high" is four times the yield of the SPDR S&P 500 ETF. Here are all of Buffett's ultra-high-yield dividend stocks, along with which one is the best of the bunch.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Berkshire Hathaway's sole ultra-high-yielder

Buffett's Berkshire Hathaway portfolio features only one ultra-high-yield dividend stock: Kraft Heinz (NASDAQ: KHC). The food and beverage company pays a forward dividend yield of 6%.

Kraft Heinz's dividend yield isn't so high because the company has increased its dividend payout. Instead, it's the result of a steadily deteriorating share price over the last few years, combined with maintaining the dividend at the same level during the period.

Berkshire does have stakes in a couple of other stocks with yields that aren't too far away from meeting the ultra-high threshold. Oil and gas giant Chevron offers a forward dividend yield of 4.61%. Satellite radio and podcast provider Sirius XM Holding's yield is 4.45%. However, the stocks didn't quite make the cut for our list.

Buffett's "secret portfolio"

Where can Buffett's other seven ultra-high-yield dividend stocks be found? In his "secret portfolio." I'm referring to the stocks owned by New England Asset Management (NEAM).

Berkshire Hathaway acquired General Re in 1998, which had acquired NEAM three years earlier. While NEAM reports its stock holdings to the U.S. Securities and Exchange Commission separately from Berkshire, Buffett owns all of the stocks in its portfolio just as much as he does any stock listed in Berkshire's SEC filings.

NEAM's two highest-yielding stocks are both business development companies (BDCs). Globus Capital BDC (NASDAQ: GBDC) pays an especially juicy forward dividend yield of 11.17%. It's followed by Ares Capital, the largest publicly traded BDC, with a yield of 8.57%.

A couple of big pharma stocks in Buffett's secret portfolio pay great dividends. Pfizer's (NYSE: PFE) forward dividend yield is 6.78%, while Bristol Myers Squibb (NYSE: BMY) offers a forward yield of 5.29%.

There's one ultra-high-yield overlap between Berkshire's and NEAM's portfolios -- Kraft Heinz. NEAM also owns another food company with an exceptionally high dividend payout. Campbell's (NASDAQ: CPB), which is best known for its soups, pays a forward dividend yield of 4.99%.

Two real estate investment trusts (REITs) are also in the mix. Realty Income's (NYSE: O) forward dividend yield is 5.6%. Lamar Advertising's (NASDAQ: LAMR) yield is 4.99%.

Finally, Buffett owns a stake in telecommunications giant Verizon Communications (NYSE: VZ) via NEAM's portfolio. Verizon's forward dividend yield is a lofty 6.22%.

The best of the bunch

How can we determine which of these ultra-high-yield dividend stocks owned by Buffett is the best of the bunch? We should obviously consider the dividend yield. In addition, the ability of the company to continue paying (and preferably increasing) its dividend is important. Growth prospects and valuation should be included, too. Based on these criteria, I think three of the nine stocks stand out above the rest.

Ares Capital's sky-high yield is a big plus. The BDC has either maintained or grown its dividend for 63 consecutive quarters (almost 16 years). It's the leader in the fast-growing private capital market. Ares Capital has also trounced the S&P 500 since its initial public offering in 2004.

Verizon is a longtime favorite for income investors. Its juicy dividend appears to be safe with the company's growing free cash flow. Verizon has also increased its dividend for 18 consecutive years. The biggest knock against the telecom provider is that its revenue and earnings growth haven't been spectacular. However, Verizon could enjoy stronger growth going forward once its acquisition of Frontier Communications closes.

The best stock overall of the group, in my opinion, is Realty Income. Its dividend yield is very attractive. Even better, the REIT pays its dividend monthly and has increased its dividend for an impressive 30 consecutive years.

Realty Income has delivered a positive total operational return every year since its IPO in 1994. Its diversified real estate portfolio, with nearly 1,600 clients representing 91 industries, helps make the company's cash flow stable. The REIT also has strong growth prospects, particularly in Europe, where it faces minimal competition.

The main drawback with this stock is its valuation. Realty Income's shares trade at 43 times forward earnings. However, I think the company's sterling track record justifies a premium price tag.

Should you invest $1,000 in Realty Income right now?

Before you buy stock in Realty Income, 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 Realty Income 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 $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — 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 June 30, 2025

Keith Speights has positions in Ares Capital, Berkshire Hathaway, Bristol Myers Squibb, Chevron, Pfizer, Realty Income, and Verizon Communications. The Motley Fool has positions in and recommends Berkshire Hathaway, Bristol Myers Squibb, Chevron, Pfizer, and Realty Income. The Motley Fool recommends Campbell's, Kraft Heinz, and Verizon Communications. The Motley Fool has a disclosure policy.

For most investors, simple is good. The Schwab US Dividend Equity ETF (NYSEMKT: SCHD) is a simple way to invest in reliable, high-quality dividend stocks. After all, if you have a life to live, you probably don't want to spend all your free time poring over stocks.

A roughly 4% yield and a unique stock selection process seal the deal when it comes to this smart investment choice. Here's what you need to know today.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

What has the Schwab US Dividend Equity ETF done?

Before getting into the Schwab US Dividend Equity ETF's investment approach, it's important to get a good feel for what it has achieved. Many dividend investors are looking to create a reliable income stream to live on in retirement.

So the goal is to own investments that produce reliable and hopefully growing dividends. Of course, a secondary hope is that the investment's value will rise as well, producing some capital appreciation.

SCHD data by YCharts.

The chart above shows that dividend investors have gotten exactly what they wanted from this exchange-traded fund (ETF). The current dividend yield of roughly 4% is in line with a "rule of thumb" retirement withdrawal rate that has led many dividend investors to focus on creating a 4% yield from their portfolios.

So, with that 4% yield, investors won't feel the need to touch the principal invested in the Schwab US Dividend Equity ETF. That can help with a feeling of financial security, or provide confidence that there will be money left to hand on to loved ones someday.

All that comes from one simple investment with a tiny expense ratio of 0.06%. To be fair, the Schwab US Dividend Equity ETF has not performed as well as an S&P 500 index ETF on a total return basis. But that's not the goal of the ETF. The goal is to provide a reliable income stream with some capital appreciation, and it does that very well.

Don't buy the Schwab US Dividend Equity ETF until you read this

You shouldn't buy any pooled investment just because of a few performance statistics. Just as with any other ETF or mutual fund, you are giving your hard-earned money to the Schwab US Dividend Equity ETF to manage on your behalf. You need to make sure you understand what is being done with that cash.

In reality, the Schwab US Dividend Equity ETF is just tracking the Dow Jones U.S. Dividend 100 Index. What you really need to know is what that index does, which is actually fairly complex. First, it pulls out all the companies that have increased their dividends for at least 10 consecutive years. Then real estate investment trusts (REITs) are eliminated from consideration. This forms the starting pool from which the index is created.

But the 100 stocks that make it into the index haven't been selected yet. The next step is to create a composite score for all of the stocks that pass the first round of screening. The score looks at cash flow to total debt, return on equity, dividend yield, and the company's five-year dividend growth rate. The 100 stocks with the highest composite scores are included in the index and are market-cap weighted.

SCHD Dividend Yield data by YCharts.

There's a lot going on there, but the point is that the Schwab US Dividend Equity ETF is focused on owning well-run and financially strong businesses that have attractive yields and strong histories of dividend growth. That's likely the same type of stock a dividend investor is trying to find.

Buying the Schwab US Dividend Equity ETF gets you an entire portfolio of such investments with just one buying decision. That's simple, and it allows you to spend your time doing other things, like spending time with family or playing golf.

Smart investors look for simple solutions that work

The Schwab US Dividend Equity ETF isn't going to give you everything an investor dreams of, but no investment can do so. What it will do is provide you with an attractive income stream and, if history is any guide, slow and steady growth of capital over time. If that's your goal, it would be a smart choice to invest in the Schwab US Dividend Equity ETF today.

Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?

Before you buy stock in Schwab U.S. Dividend Equity ETF, 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 Schwab U.S. Dividend Equity ETF 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 $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*

Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 177% 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 June 23, 2025

Reuben Gregg Brewer 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.

So you want to invest in the stock market, but you don't want to hand-pick specific stocks. Simply mirroring the S&P 500 (SNPINDEX: ^GSPC) market index can deliver fantastic results over the years, and you'll never lose a single night of sleep worrying about the rise or fall of any particular stock.

But you're working with a strictly limited budget of $500 this month, and the usual exchange-traded funds (ETFs) are a little bit too pricey. Vanguard S&P 500 ETF (NYSEMKT: VOO) traded at $549 per share on June 18. SPDR S&P 500 ETF (NYSEMKT: SPY) costs $597 per stub, and the iShares Core S&P 500 ETF (NYSEMKT: IVV) goes one tiny step further to $599.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Sure, you can save up a bit more before buying these high-quality ETFs, or use the fractional share feature of your favorite stock brokerage to pick up 83% of an iShares or SPDR share for less than $500. But you actually have one more option. Meet the SPDR Portfolio S&P 500 ETF (NYSEMKT: SPLG) -- a fourth pure-play S&P 500 index fund that costs just $70 per share today.

How SPLG stacks up against the classics

This fund is exactly the same thing as one of the classic S&P 500 index ETFs. They hold the same 503 stocks, reflecting the components of the S&P 500 index. The weightings are identical. Their management fees are slightly different, with an annual expense ratio of 0.09% for the more famous S&P 500 ETF and 0.02% with the lower-priced Portfolio fund. But both offer the same performance as the underlying S&P 500 index, for all intents and purposes:

^SPX data by YCharts

The subtle differences that matter

The SPDR fund managers at State Street (NYSE: STT) agree that these funds are very similar. They underline the fact that the higher-priced fund happens to be the largest and most heavily traded ETF on the market, making it the obvious choice when you're looking for top-notch liquidity. The bid-ask spreads are also lower for this fund, as a direct effect of the unbeatable liquidity and higher price -- bid-ask gaps a couple of pennies apart make a bigger percentage-based difference to a lower-priced ETF.

With lower annual fees and higher price-spread trading costs, the Portfolio fund is arguably the superior choice for long-term holdings. On the other hand, the classic SPY ticker (or its VOO and IVV cousins) offers ever so slightly lower costs for more frequent trades. In other words, the ETF that's easier to trade with a smaller budget brings higher trading costs over time. It's the Sam Vimes "boots" theory of socio-economic unfairness at work.

But there are a couple of awesome upsides this time. State Street makes up for the less efficient economics by charging lower management fees. And the resulting differences are incredibly small.

Small budget, smart move

All things considered, I think the Portfolio fund is a winning concept for people with modest investment budgets. For example, my daughter recently opened her first brokerage account with a SPDR Portfolio S&P 500 position that fit her budget just right. Fractional shares weren't an option, and it's probably better to get started quickly rather than saving up for a more expensive ETF.

That position has already posted a double-digit percentage gain in less than three months, and she's off to a good start with a lifetime of intelligent money management.

The SPDR Portfolio ETF may not be the perfect fund for your portfolio, and many investors clearly prefer the higher-priced version. But you should know about it, just in case this lower-priced option ever meets your specific needs. Today, $500 won't quite buy you a full-priced S&P 500 index fund, but you can get 7 SPDR Portfolio shares with that budget.

Should you invest $1,000 in SPDR Series Trust - SPDR Portfolio S&P 500 ETF right now?

Before you buy stock in SPDR Series Trust - SPDR Portfolio S&P 500 ETF, 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 Series Trust - SPDR Portfolio S&P 500 ETF 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 $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $891,722!*

Now, it’s worth noting Stock Advisor’s total average return is 995% — a market-crushing outperformance compared to 172% 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 June 9, 2025

Anders Bylund has positions in SPDR Series Trust-SPDR Portfolio S&P 500 ETF and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

Are you looking to build a worry-free, passive long-term portfolio that will allow you to focus on other things while growing your money? Buying and holding a handful of exchange-traded funds (or ETFs) is the answer, of course, and the SPDR S&P 500 ETF Trust (NYSEMKT: SPY) remains a top choice.

If you're truly looking for lifetime holdings though, you may want to consider a slightly different solution that allows you to adjust your overall allocation as time marches on. Namely, you'll want to buy a handful of different (but complementary) ETFs that can be individually scaled back or added to as your risk tolerances change.

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If you have $1,000 in cash available to invest that isn't needed for monthly bills, to pay off short-term debt, or to bolster an emergency fund, here's a combination of ETFs to consider that will likely set most investors up for a lifetime of strong performance.

Vanguard Growth ETF

If this really is going to be a "forever" portfolio, it's a reasonably safe bet that growth is a priority for most of the time frame in question. The Vanguard Growth ETF (NYSEMKT: VUG) will handle this part of the overall job nicely.

Just as the name suggests, the Vanguard Growth ETF holds a basket of growth stocks. The fund currently holds significant stakes in Apple, Microsoft, and Nvidia ... some of the market's top-performing growth names of late. Although this company weighting evolves over time as some companies' market caps outgrow others, this ETF gives you a great shot at major long-term capital gains.

Data by YCharts.

There's a very particular reason, however, you might want to own the Vanguard Growth ETF instead of seemingly similar alternatives like the Invesco QQQ Trust, which holds many of the same stocks. That's the fact that this fund is meant to mirror the CRSP U.S. Large Cap Growth Index. (CRSP stands for the Center for Research in Security Prices.)

That won't mean much to most people. This might get your attention though: The CRSP Large Cap Growth Index largely sidesteps the common problem of taking on too much exposure to the market's very biggest companies, which in turn leaves investors vulnerable to sizable setbacks once the tide finally turns against these top names.

That hardly makes it an "equal weight" index, to be clear -- it's still measurably top-heavy.

The fund is top-heavy to a degree that's tolerable and even a little desirable, however, by virtue of ensuring a little bit of overexposure to companies that are becoming much bigger due to actual top- and bottom-line growth.

Schwab U.S. Dividend Equity ETF

Growth stocks aren't the only way for your portfolio to achieve net growth, of course. It can also be done by a slow and steady (and ever-rising) flow of fresh cash into the account, which is then used to purchase more of whatever's generating that income. For some investors, that will be bonds and other fixed-income instruments. For most people though, this income will come from dividend-paying stocks.

The irony? High-quality dividend-paying stocks often end up outgaining the broad market anyway.

Mutual fund company Hartford crunched the numbers, determining that since 1973, stocks of companies that were able and willing to consistently grow their dividend payments produced average annual net gains of more than 10% (assuming reinvestment of those dividends) while stocks that didn't dish out any dividends didn't perform half as well. Moreover, reliable dividend payers were the market's least volatile stocks during this stretch, making them easier to stick with during turbulent times.

Data by YCharts.

What gives? The best explanation is the argument that quality always eventually shines through, and a reliably growing dividend is a good sign that a company is solid and well-run. Although there's certainly the occasional exception to this norm -- think non-dividend-paying Nvidia -- identifying these exceptions isn't always easy. You should invest based on your best odds, particularly when you're thinking in terms of a lifetime.

The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) is arguably the best way to plug into this dividend-driven dynamic. Based on the Dow Jones U.S. Dividend 100™ Index, this ETF doesn't simply hold what appear to be the market's most promising dividend stocks. In addition to requiring at least 10 consecutive years of annual dividend increases, inclusion in this index also considers fundamental factors like free cash flow versus debt, return on equity, and its typical dividend growth rate. Each prospective constituent is then ranked on these metrics to screen out all tickers other than the best 100 names.

While this approach seems quite mechanical, that's the reason it works so well. There's no misleading emotion, presumption, or bias built into the selection and rebalancing process.

iShares U.S. Technology ETF

Finally, add the iShares U.S. Technology ETF (NYSEMKT: IYW) to your list of ETFs to buy and hold for a lifetime if you've got $1,000 -- or any other amount of money -- you'd like to put to work for a while.

It's obviously different than either of the other two exchange-traded funds suggested here, both of which represent a unique investing school of thought. A sector-based fund is more strategically precise, calling into question whether or not it's actually capable of being a true lifetime holding. And maybe it isn't. It would be shocking, however, if the technology sector wasn't a great one to plan on holding for the long haul, even if you can't fully see its future.

Data by YCharts.

Think about it. Ever since personal computers began proliferating back in the late 1990s, the world has increasingly become digitized. Automobiles have them on board, and people would struggle to function without the mini mobile computer they now carry around in their pocket or purse. Artificial intelligence is now being used by the pharmaceutical industry to discover, design, and digitally test new drugs. Factories are made more efficient by being able to instantly share and create actionable data. At the heart of all of it is technology, and now that we've seen what it can do, we're certainly not going back to the "old way" that was less efficient and less effective. Now, one of the world's most commonly asked questions is: How can we use technology to make things even better?

There's more than one exchange-traded fund that would fit this bill, but the iShares U.S. Technology ETF is arguably the best all-around prospect thanks to how it weights its holdings.

Built to mirror the performance of the Russell 1000 Technology RIC 22.5/45 Capped Index, this fund -- like the aforementioned Vanguard Growth ETF -- at least attempts to maintain a reasonably balanced allocation even when the market itself is becoming top-heavy thanks to the ongoing growth of a small handful of massive companies. As Russell explains in a factsheet on the index, "At the quarterly index reviews, all companies that have a weight greater than 4.5% in aggregate are no more than 45% of the index, and no individual company in the index has a weight greater than 22.5% of the index."

This approach doesn't always perfectly accomplish its goal. Right now, for instance, Microsoft, Nvidia, and Apple collectively account for about 45% of the index's value. That's not particularly well balanced.

The weighting rules will help more often than not in the long run though, and will certainly help more often than they hurt.

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Could investing in a simple, low-fee S&P 500 index fund today set you up for life? You may not want to know the answer. You may prefer to hunt for exciting growth stocks instead. But I'm here to tell you that regularly plunking meaningful sums in an S&P 500 index fund can do wonders over long periods.

Even Warren Buffett has endorsed S&P 500 index funds, stipulating in his will that much of what he leaves his wife should go into one. Here's a look at why you might consider investing in an S&P 500 index fund, too.

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Meet the S&P 500 index

An S&P 500 index fund is an index fund that tracks the S&P 500 -- an index (a grouping) of 500 of the biggest companies in the U.S. The fund will hold roughly or exactly the same stocks in roughly the same proportion, aiming for roughly the same performance -- less fees. And there are some very low fees out there.

Here are the recent top 10 components in the index by weight:

Stock	Percent of Index
Apple	6.63%
Microsoft	6.27%
Nvidia	6.00%
Amazon.com	3.70%
Meta Platforms	2.50%
Berkshire Hathaway Class B	2.12%
Alphabet Class A	1.99%
Broadcom	1.83%
Alphabet Class C	1.64%
Tesla	1.55%

Data source: Slickcharts.com, as of April 16, 2025.

It's worth noting that this index is a market-capitalization-weighted one, meaning that the biggest companies in it will move its needle the most. For example, you can see in the table above that Microsoft's weighting is about four times that of Tesla, so Microsoft's stock-price moves will make a much bigger difference in the index than will Tesla's. Of course, these are still the top 10 components. General Mills is also in the index, recently in 255th place, and with a weighting of just 0.07%. Toy company Hasbro, in 488th place, recently had a weighting of 0.02%.

Altogether, these 500 companies make up about 80% of the total value of the U.S. stock market. Thus, the S&P 500 is often used as a proxy for the market. It's mainly made up of giant, large, and medium-sized companies, though. If you want a more accurate proxy, you might opt for a broader index fund, such as the Vanguard Total Stock Market ETF (NYSEMKT: VTI), which aims to include all U.S. stocks, including small and medium-sized ones, or the Vanguard Total World Stock ETF (NYSEMKT: VT), encompassing just about all the stocks in the world.

Why invest in an S&P 500 index fund?

Here's a top-notch S&P 500 index fund to consider -- the Vanguard S&P 500 ETF (NYSEMKT: VOO). Its expense ratio (annual fee) is a mere 0.03%, meaning that for every $1,000 you have invested in the fund, you'll pay an annual fee of... $3.

Why invest in such a fund? Well, because it can perform really well over time and it's way easier to just keep adding money to it than to spend time studying investing and scouring the stock market for the best investments. Instead of looking for a few needles in a haystack, buy the haystack!

Owning shares of an S&P 500 index fund means you'll quickly own (small) chunks of 500 of the biggest companies in America -- and as some companies grow and others shrink over time, the index will be adding and dropping components accordingly.

The table below shows how big a nest egg you might build over time in an S&P 500 index fund, if your money grows at 8%. For context, the S&P 500 has averaged annual gains of around 10% over many decades -- including dividends and not including the effect of inflation. So using 8% is a mite conservative.

Growing at 8% for	$7,500 invested annually	$15,000 invested annually
5 years	$47,519	$95,039
10 years	$117,341	$234,682
15 years	$219,932	$439,864
20 years	$370,672	$741,344
25 years	$592,158	$1,184,316
30 years	$917,594	$1,835,188
35 years	$1,395,766	$2,791,532
40 years	$2,098,358	$4,196,716

Source: Calculations by author.

If that's not convincing enough, know that you probably can't do as well with some other, managed large-cap stock mutual fund. The S&P 500 index has actually outperformed most such funds, which tend to be run by highly trained financial professionals working hard to outperform the index. Over the past 15 years, for example, the S&P 500 bested 89.5% of all large-cap funds.

Whether you opt for a low-fee S&P 500 index fund or not, be sure to have a solid retirement plan, and to be saving and investing in order to have a comfortable financial future.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Selena Maranjian has positions in Alphabet, Amazon, Apple, Berkshire Hathaway, Broadcom, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, Tesla, Vanguard S&P 500 ETF, and Vanguard Total Stock Market ETF. The Motley Fool recommends Broadcom and Hasbro and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.