Super_Mario_Luigi t1_ja32s4z wrote on February 26, 2023 at 2:09 PM

Reply to comment by Cruian in Best S&P500 ETF? Does it really matter? by TheBigFish2004

Obsolete? It has traditionally delivered a 10%+ return per year for decades.

Cruian t1_ja3fuxd wrote on February 26, 2023 at 3:45 PM

But why use that when for the same costs you can use US total market? Better diversification and gives coverage of a compensated risk factor.

Super_Mario_Luigi t1_ja3wjur wrote on February 26, 2023 at 5:37 PM

The S&P 500 has returned 11.88% since 1957. I think the intent of diversification has stayed the course. 66 years of great returns isn't some fluke.

The biggest risk I'd say, is when you plan to retire. As it is volatile, it takes big swings. Many funds down significant amounts right now would be rough if you are looking to retire. However, historically, it returns.

Cruian t1_ja3x9h6 wrote on February 26, 2023 at 5:41 PM

I'm not saying avoid S&P 500. I'm saying to not use S&P 500 only funds, but to use broader funds that cover S&P 500 and more.

S&P 500 works, but for the same exact cost and difficulty, there are better options (US total market). And for only a slightly higher cost (and maybe 1 additional fund), even better than that (going global).

>However, historically, it returns

Like I said, it has worked so far, but it both:

Ignores the compensated small cap risk factor
Takes on the uncompensated single country risk factor

I don't see any reason to do either of these.