Why don’t people just invest in the S&P ?

[zc17bills]

I don’t want to use the word guaranteed, but you pretty much are set to get 8% returns every year. So why not just annually dump your investments into the index?

 

[josphat]

@zc17bills A lot of us do. Or, even better, into a total US stock index. This is, in fact, one of the simplest and most effective ways to invest for the long term.

See /r/Bogleheads or bogleheads.org

 

[baratom]

@josphat Agree. The vast majority of our portfolio is index mutual funds stocks n for bonds. Lowest fees you can get. Professional mgt. Avg risk. Avg reward. Too many try to beat the market. Too many people remember the 1990s. Not enough remember what happened after that. Many invested 100pct in pure individual stocks n lost big.

 

[christian911]

@zc17bills It's what I did since 97. I needed an uncomplicated way to grow and my pay was a joke. I don't have the skills to day trade. I'm happy with the results in 2023.

 

[keymooney]

@christian911 How much have you put in as compared to how much you have made? If you don't mind me asking that is

 

[christian911]

@keymooney That's fine. I can't really say. I wish i had kept up. I just added money when i could.

 

[fl269fl269]

@zc17bills Index investing is best, but checkout the S&P500 from June 2000 thru June 2012. S&P500 basically flat for 12 years. This can happen so be prepared.

 

[resjudicata]

@fl269fl269 Couple a “once in a lifetime” economic disasters in a 15 year period tends to do that.

 

[baruch7777777]

@resjudicata Economic disaster occur about once every decade, definitely not once in a lifetime.

 

[hollan]

@zc17bills

pretty much are set to get 8% returns every year

This just isn't true, you have no idea what the S&P will do in the future. The historical average real returns have been around 8%, that doesn't mean it's "set" to always return that. It's a basic disclaimer on all funds - past performance is no guarantee of future results.

 

[saskia]

@hollan Yea cause this year I’m up way more than 8% buy VOO and just chill

 

[scott731]

@hollan I love the “past performance is no indication of future returns”. Yeah pretty sure if something has returned an average of 7-8% for 80 years it’s safe to assume it will continue to do similar for the next 80 years, it’s just a CYA for finance advice but it’s total nonsense

 

[hollan]

@scott731 The way you're thinking about this just tells me you have no understanding of statistics. The S&P 500 does not made 8% year over year. When you take the mean of the past 80 years it comes out to 8%. But in that time it can go decades of low performance, years of negative returns, and then has had bull runs that drag up the mean. If you have put your money into the S&P at certain highpoints you did not make an 8% annual return.

 

[sparletta]

@hollan False, False, and really niaeve. I lost 100k last year, still recovering from that hit!

 

[godbmyguide]

@sparletta in the longterm it has a tendency to average 10 percent before inflation annually. Yeah, last year it went down nearly 30 percent but in the last 3 months alone it has went back up 25 percent. Excluding the possibility of the collapse of the entire US it is a fund that will on average consistently go up.

 

[kyrani]

@zc17bills VTI has about 7 times the number of companies in S&P 500. If you invest in the latter your are betting on the largest 13% and the reason why they became the largest.

 

[messi]

@zc17bills Because most people think they (or their financial advisor) are smarter than average. Most people also think they are better looking and more endowed than average. But that is just not statically possible so people end up surprised or angry with their less than average results.

 

[waiting4]

@zc17bills If you are only in the S&P 500, you are pretty poorly diversified. Even if you want to be aggressive, and eschew bonds, you are missing out on small cap, foreign, and a lot of real estate stocks. You are also arguably overweight in tech today. Diversification will buttress your accounts in the years the S&P is not performing well.

 

[annointing]

@zc17bills We do, even I have a shit ton of money invested in it but if you have extra money why not try to find other ways of growing it as well?

I've put in roughly 650k to date, but I will use other money of mine for real estate(which as been over 10% each year for the last 5 years I've done it, and mixed use real estate has been more). I put a percentage into options trading which I automated(learned from my time working in HFT) and so on and so forth.

I guess the main reason at least for me is diversification and having different avenues of money coming in, and for others it might be investing into a business they have expertise in, or anything else that gives them a little bit more control and knowledge of how it will turn out.

But yes at the age of 24 I still believe S&P is a great investment and will continue putting money towards it but I won't put all my money into one specific thing.

 

[christambassador1968]

@zc17bills I have my money in a S&P. The fund can be little rocky in a down market. The fees are low.
I think people just want to be in charge. Being a boss has a cost.