read the prospectus, but if you aren't going to do that, at the very least you should go to the descriptive web pages. You REALLY should take the time to do that much, really. I mean really
. How much time would you spend on some other $800 purchase? I'm going to give you the links and some explanation, but PLEASE, take the time to click on them and poke around the websites a bit and get an idea of how companies go about describing their ETFs and mutual funds.
Read the descriptions for yourself. Don't let someone else (like me) do it for you. Would you let someone else test-drive a car for you, or try on shoes for you?https://personal.vanguard.com/us/funds/ ... IntExt=INThttps://www.spdrs.com/product/fund.seam?ticker=spy
OK,here's the Cliff's Notes version. SPY is the biggest, oldest, and most popular ETF that tracks the S&P 500 index. There are many other ETFS and mutual funds that also track it. VOO is Vanguard's S&P 500 ETF. Schwab has an S&P 500 mutual fund, SWPPX, that you can buy with a $100 minimum purchase.
The S&P 500 is a cap-weighted index of 500 stocks, not exactly the 500 biggest, but 500 that S&P deems to be "leading companies in leading industries." For a very long time it has been taken as a proxy for "the stock market," and, by market capitalization (dollar value) it actually accounts for 80% of the stock market and actually is pretty close to the total stock market.
As interest in small companies grew, people wanted indexes that were more comprehensive than the S&P 500 and that really tried to track the total market, including the smaller companies. As electronic technology improved, it became possible to create such indexes, and then to create index funds that tracked them. One such index is the MSCI US Broad Market Index. Mutual funds and ETFs that track such indexes tend to be called "total stock market" funds. VTI is Vanguard's "total stock market" ETF.
SPY and VTI could
be called fundamentally the same in the sense that they approximate the whole market and don't single out specific sectors or categories. But VTI is a closer approximation to the total market than SPY is.
Theoretically, the reason most investors would want to hold an S&P 500 fund or ETF is to hold "the stock market," and if that's the reason for wanting it, a total market fund or ETF like VTI does a better job. The S&P 500 funds and ETFs give you 80% of the market; VTI gives you 99.5%. In practice, though, the difference between the two has been amazingly small.Any
total stock market index ETF or mutual fund, or any S&P 500 ETF or mutual fund, would be a suitable "core" holding for the domestic stock portion of your portfolio, as long as the expense ratio isn't too high. But you should at least be thinking about holding international stocks and bonds as well--maybe not now, but someday.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.