|Bid||0.00 x 1000|
|Ask||0.00 x 1000|
|Day's Range||264.91 - 266.29|
|52 Week Range||214.83 - 270.87|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||1.00|
|Expense Ratio (net)||0.03%|
If you're new to investing, one of the best ways you can dip your toe into the water is to buy a mutual fund or exchange-traded fund (ETF) that invests in all 505 of the S&P 500's stocks. Your first question: What is the S&P 500? Your second question: How come there are 505 stocks, not 500? Both are relatively painless questions to answer.First, the S&P 500 represents 500 of the largest and most established companies listed on a U.S. stock exchange. You're likely familiar with many of the index's constituents. InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe S&P 500's largest company by market capitalization [share price multiplied by number of shares outstanding] is Microsoft (NASDAQ:MSFT) at $1.02 trillion. Warren Buffett, one of the most successful investors of all time, has said that most investors should simplify their investments to deliver better long-term returns. He put it this way in his 2013 annual letter to shareholders:"My advice [to the trustee] couldn't be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.) …I believe the trust's long-term results from this policy will be superior to those attained by most investors -- whether pension funds, institutions or individuals -- who employ high-fee managers."Low costs and few moving parts wins the game in the long run.The second question requires much less legwork. There are 505 stocks in the index because some of the companies, such as Buffett's Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B), have more than one class of shares, which means Berkshire Hathaway counts as two holdings, not one.Simple, right? * 7 Stocks to Buy As They Hit 52-Week Lows Now that I've answered the two questions, I better cut to the chase by providing readers with a short list of easy ways to buy S&P 500 stocks. Option No. 1: The SPDR S&P 500 ETF (SPY)The oldest ETF in the U.S. -- launched in 1993 -- is the SPDR S&P 500 ETF (NYSEARCA:SPY). It also happens to be the biggest with $260 billion in assets. As you probably expected, it has 500 holdings, but you may be surprised to hear that the SPY ETF currently pays you a dividend yield of 1.9% to hold it. And that's all for the expense ratio of 0.09%, or $9 per $10,000 invested per year.However, remember what Buffett said about low-cost funds. It's not the cheapest of the ETFs tracking the S&P 500, but it is the most popular. And it has stood the test of time. Option No. 2: Vanguard S&P 500 ETF (VOO)Source: Shutterstock Two of the next three largest U.S.-listed ETFs also invest in every one of the S&P 500 stocks -- the Vanguard S&P 500 ETF (NYSEARCA:VOO) has $110 billion in assets and charges 0.03%. This used to be 0.04%, until Vanguard cut the fees on three of its most popular products -- including the VOO ETF.As Vanguard's literature points out, this fund is "more appropriate for long-term goals where your money's growth is essential." It makes a great base holding. * 7 S&P 500 Dividend Stocks to Buy at Least Yielding 3% Clocking in at the VOO ETF's old expense ratio of 0.04% is the iShares Core S&P 500 ETF (NYSEARCA:IVV) with $178 billion in assets. These each give you plenty of choice when it comes to capturing a significant portion of American equities. Option No. 3 - Buy Buffett's Stock (BRK.B)Source: Shutterstock Berkshire Hathaway has often been compared to a very large mutual fund because it owns $203 billion worth of publicly traded stocks, most of them part of the S&P 500.However, in addition to the equities, you get a small piece of hundreds of private companies operating in all kinds of different sectors of the economy. The best part: Buffett won't charge you annual fees to own his fund. He'll just deliver long-term returns that handily beat the S&P 500. From 1965 to 2017, Berkshire Hathaway stock's generated a compound annual growth rate of 20.5%, more than double the S&P 500. As Warren Buffett suggests, you ought to do it early and often and at the lowest cost possible.These three options plus mutual funds that track the S&P 500 index (they're slightly more expensive than ETFs) will get the job done while letting you sleep easier at night. As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * Should You Buy, Sell, Or Hold These 7 Medical Cannabis Stocks? * 7 Strong Buy Stocks With Over 20% Upside * 7 Reasons Stock Buybacks Should Be Illegal Compare Brokers The post 3 Different Ways for Newcomers to Buy S&P 500 Stocks appeared first on InvestorPlace.
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When it comes to building a portfolio, Vanguard ETFs and funds are often the top draws for investors. And there's a good reason for that. The firm and investment pioneer John Bogle created the idea of the index fund back in the 1970s. Moreover, the asset manager's philosophy stems from low-cost investing. So, naturally, Vanguard ETFs are some of the least expensive funds to own. When putting all the pieces together, it becomes really easy to see why Vanguard ETFs have attracted billions of dollars' worth of assets from investors both big and small.The question is which Vanguard funds make sense for you?The firm has a line-up of 80 different ETFs and the bulk of those offerings can be a bit heavy. For example, the Vanguard S&P 500 ETF (NYSEArca:VOO) holds more than $106 billion in assets, while the Vanguard FTSE Emerging Markets ETF (NYSEArca:VWO) holds roughly $62 billion. As a result, just a few Vanguard ETFs get most of the press. That's a shame as the firm's low-cost and index-hugging mantra extends to the rest of its ETF line-up as well.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * The 10 Biggest Announcements From Apple WWDC 2019 With that, here are three wonderful, but commonly overlooked Vanguard ETFs that should be right at home in your portfolio. Vanguard Extended Market ETF (VXF)Source: Shutterstock Over the long haul, small- and mid-cap stocks have long outperformed their bigger counterparts. However, most investors still remain woefully underweight smaller stocks and finding successful individual winners here can be incredibly difficult. This is where Vanguard ETFs can come to the rescue.The Vanguard Extended Market ETF (NYSEARCA:VXF) allows investors to tap into both small- and mid-cap stocks at the same time with one ticker. VXF tracks the S&P Completion Index. As the name implies, the fund owns everything that isn't in the large-cap focused S&P 500. And we're talking literally everything. VXF currently holds more than 3,260 different small- and mid-cap stocks. When you combine the fund with large-cap holdings, you basically have the U.S. stock market covered. The best part is, by using this ETF, the volatility and single-company risks are minimized to almost zero. With it, investors can instantly overweight the economies real growth engines.It turns out this is a powerful thing to do.When it comes to Vanguard ETFs, VXF has been a top performer. Over the last ten years, the fund has averaged a 16.61% annual total return. That's not too shabby by any means. And as a Vanguard fund, VXF is pretty cheap to own. Expenses for the ETF clock in at just 0.07%- or just $7 per $10,000 invested.In the end, VXF does everything a Vanguard ETF should do. That's broad indexing a rock-bottom price. Vanguard Mortgage-Backed Securities ETF (VMBS)Source: Grab Media When it comes to bonds, Treasury securities are often the first stop for investors and there are plenty of Vanguard ETFs looking at these. However, there is a way to get a slightly higher yield and still keep that government guarantee. We're talking about mortgage-back securities or MBS bonds.Mortgage-backed securities are bonds secured by home and other real estate loans. There are all different flavors of these, but the vast bulk of them are residential-focused and issued by federal government agencies like Ginnie Mae (GNMA) or government sponsored-enterprises Fannie Mae (FNMA), or Freddie Mac (FHLMC). Moreover, MBS bonds typically pay slightly more than comparable Treasury bonds thanks to the higher risk that you or I could default on our mortgages or pay them back earlier. However, GNMA bonds are backed by the full faith and credit of the U.S. government, while the recession taught us that the government will bail out Freddie and Fannie when the water's get rough.With that, the Vanguard Mortgage-Backed Securities ETF (NYSEARCA:VMBS) could be a good bet for investors looking for a bit more. VMBS tracks Bloomberg Barclays U.S. Mortgage-Backed Securities Float Adjusted Index -- which only focuses on U.S. agency mortgage bonds. None of the funny stuff. As a result, the ETF has been pretty steadfast since inception and yields a healthy 3.02%. * The 10 Best Stocks for 2019 -- So Far By using the Vanguard ETF, investors can get access to an esoteric asset class for a cheap 0.07% in expenses. Vanguard International Dividend Appreciation ETF (VIGI)Source: Shutterstock With $34 billion in assets, the Vanguard Dividend Appreciation ETF (NYSEARCA:VIG) is a star player among Vanguard ETFs. VIG follows those stocks that have long histories of increasing their dividends every year. This strategy provides a way for investors to grow their income potential and provides with great long-term returns.But it's not U.S. stocks that benefit from growing dividends, international ones also win here.Which is why the smaller and often ignored Vanguard International Dividend Appreciation ETF (NYSEARCA:VIGI) can be a great compliment to the more popular VIG.VIGI also tracks a basket of large-cap stocks that have increased their dividends consistently over the last seven years. This time, the ETF combs both non-U.S. developed and emerging markets to find its dividend champions -- currently at a 75%/25% spilt between developed and emerging market stocks. The top 400 stocks are included in the index.This provides a way for investors to not only score some much-needed international exposure but also income growth as well. Currently, VIGI yields about 1.89%. However, that yield could be worth even more over the long haul. As foreign currencies fluctuate against the U.S. dollar, a drop in the dollar would boost the Vanguard ETFs underlying yield, as weaker local currencies convert into the stronger dollar.All in all, VIGI should belong in your portfolio just as much as VIG. Expenses run a cheap 0.25%.Disclosure: At the time of writing, Aaron Levitt did not hold a position in any of the ETFs mentioned. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 6 Retailers Including Disney Agree to Ditch On-Call Scheduling * The 10 Best Stocks for 2019 -- So Far * 7 Small-Cap ETFs to Buy Now Compare Brokers The post 3 Wonderful, But Ignored Vanguard ETFs appeared first on InvestorPlace.
Warren Buffett spent a good deal of time at Berkshire Hathaway's (NYSE:BRK.A, NYSE:BRK.B) annual meeting in early May defending the company. Acknowledging that Berkshire Hathaway stock has underperformed the S&P 500 over the past decade, the Oracle of Omaha suggested that past performance doesn't mean that it won't do well in the future. It's a bit of a leap of faith to trust Buffett and his sidekick, Charlie Munger, but if you've owned BRK.B stock for a long time, that's what you've done.There's no doubt Buffett's made mistakes over the 53-plus years he's run the company, but at the end of the day, he's created several billionaires over the years including himself, so you're not going to hear those people complaining about his lack of performance. InvestorPlace - Stock Market News, Stock Advice & Trading TipsNot in a million years. To suggest that Buffett should do this or that to tweak Berkshire so that it can deliver better performance has become a sport all of its own. We all have ideas we think will be just the tonic for Berkshire Hathaway stock. * The 10 Best Stocks for 2019 -- So Far Here are seven I think would help BRK.B end its losing streak. They are in no particular order of urgency or likelihood. Special DividendSource: Shutterstock Investors have been clamoring for Berkshire Hathaway stock to pay a dividend for as long as I can remember. Unfortunately, Warren Buffett prefers to be paid dividends rather than the other way around. It's hard to argue with his logic. In 2018, Berkshire raked in $3.8 billion in dividends from its equity holdings, almost 80% from its five-largest holdings. At a 5% interest rate, BRK.B could borrow $76 billion for future acquisitions using its dividends for annual interest payments.So, there's plenty of evidence that the company's equity portfolio is doing a good job generating passive income for the company. As for a regular dividend, Buffett would prefer not to get locked into some quarterly arrangement. He prefers to use the money for growth. However, as my InvestorPlace colleague Aaron Levitt recently wrote, a special dividend would reward long-time shareholders and use up some of its $114 billion in cash. In Europe, they figure out how much dividend to pay at the end of the fiscal year. Berkshire Hathaway stock could do the same based on some formula that takes into account the amount it's repurchased over the past year and the length of ownership. Increase Share RepurchasesSource: Shutterstock I've never been a fan of share repurchases because it's my experience that most companies overpay for their stock. Recently, a report came out from Ned Davis Research that shows the S&P 500 would have been 500 points lower at the end of the first quarter of 2019, if not for share repurchases. Over the last eight years, the bull market has largely been sustained by buybacks, as share repurchases over that period equaled $3.5 trillion. In the past year, Buffett's lowered his price of admission for making share repurchases. In Q1 2019, it repurchased $1.7 billion of Berkshire Hathaway stock. He's on record stating that he'd spend $100 billion buying back its stock in the future if he thought Berkshire could get a reasonable price. I hope he does, but only when the market tanks and no one else has any money to buy back their stock. And here's another thing. * 3 All-American ETFs to Consider Buying If buybacks have had such a significant effect on stock prices, the fact BRK.B has done very little of its own share repurchases over the past eight years suggests its performance isn't nearly as bad as everyone thinks. Sell McLane CompanySource: Shutterstock This isn't an new thought on my part. I first suggested Buffett sell McLane Company, Berkshire's food and beverage wholesale distributor, in 2013. "For the first nine months of 2013, the food and beverage wholesale distributor generated 26% of BRK.B's overall revenue, but just 2.1% of the company's earnings before taxes," I wrote in November 2013. "While I understand the wholesale distribution business is high-volume, low-margin, it generates a worse yield (1.1% earnings before taxes margin) than Walmart's (NYSE:WMT) dividend yield of 2.4%."How is it doing today?In 2018, McLane Company accounted for 20% of Berkshire's overall revenue while its pre-tax earnings were just 6.1% of the company's pre-tax operating profit and they were only that high because BRK.B had $22.7 billion in net unrealized losses from its equity holdings. Berkshire originally acquired McLane Company from Walmart in 2003 for $1.5 billion. I'm sure it could find a buyer for the firm. Do a SpinoffSource: Shutterstock One of the problems Berkshire Hathaway stock faces today is that potential acquisitions know that the company is trying to bag the elephant. As a result, the price asked moves higher, knowing that Buffett wants to make a big acquisition and has the money to do so. Once upon a time, companies came to Berkshire wanting to be acquired regardless of the price. Now, it appears that acquisition prices have gotten so out of hand; potential acquisitions are asking the world. In the past two years, BRK.B made a total of $6.0 billion in acquisitions. In 2016, that number was five times higher due to the Precision Castparts acquisition. Acquisitions are few and far between. To speed this process up, I suggested in 2018, that Berkshire spinoff some of its excess cash and McLane Company. "It might be wiser for Buffett to spin off $30 billion of the excess cash plus McLane Company, its wholesale distribution business," I wrote in August 2017. "The separately traded company would be run by his chosen (but yet unnamed) successor, which would allow it to begin succession planning while buying some smaller businesses that might not fit the Berkshire Hathaway M&A criteria." * 6 Stocks to Buy That Are Bucking the Retail Selloff Today, I think it still makes sense, but I'd sell McLane Company after completing the spinoff. Think of it as a kind of special dividend. Buy Some Smaller CompaniesSource: Shutterstock In some ways, Berkshire Hathaway stock is like a large mutual fund. In other ways, it's similar to private equity in that it makes a big acquisition in a particular industry and then uses that company as a platform for growth -- both organically and through bolt-on transactions. Right now, BRK.B has seven platforms for growth: insurance, railroads, energy, manufacturing, service and retail, and financial services. The $6 billion in acquisitions over the last two years were of the bolt-on variety. This suggestion works better if Berkshire follows through on my previous proposal to spinoff some cash into a smaller business that can go after little fish. Until that happens, I'm not sure $6 billion is ever going to be enough for investors. Buy the S&P 500Source: Shutterstock At the annual shareholders meeting in Omaha in early May, an investor pointed out to Buffett that if he'd taken Berkshire Hathaway stock's cash and T-bills over the past 15 years -- keeping Buffett's often-quoted $20-billion cushion -- and invested in an index like the S&P 500, the company would have $43 billion in additional cash and a book value that's 12% higher. Buffett's long argued that regular investors ought to buy a low-cost S&P 500 index fund along with a short-term bond fund. So, while he likes to have cash in order to make his now famous "preferred share" deals -- the most recent being a $10 billion investment in Occidental Petroleum (NYSE:OXY) -- I'm sure he could put $60 billion in the Vanguard S&P 500 ETF (NYSEARCA:VOO) and still have plenty of financial flexibility for making these kinds of deals or pulling the trigger on a big acquisition. * 3 Small-Cap Stocks to Buy After all, if you can't beat them, join them. Acquire Brookfield Asset ManagementSource: Governor Earl Ray Tomblin via FlickrThis last one is my personal favorite. Although Buffett has said that he's already chosen his successor, I'd like him to consider Bruce Flatt and Brookfield Asset Management (NYSE:BAM) as a possible alternative. Up until the past couple of years, Flatt flew under the radar of most investors. However, Brookfield's announcement that it had purchased 62% of Oaktree Capital Management (NYSE:OAK) in March for $4.8 billion, surely opened a lot of eyes. Flatt is only 54, the perfect age for someone taking over the Berkshire operation. Furthermore, he understands the Berkshire model; Brookfield runs several asset management platforms including infrastructure, real estate, private equity, and now with Oaktree, it's got a distressed debt and credit business. Brookfield's current market value is $46 billion. Let's assume Berkshire would have to pay a 50% premium. That puts the deal at almost $70 billion, well within the company's means.More importantly, it gives Berkshire Hathaway stock one heck of a leader for the next 10-15 years. It won't happen because Buffett doesn't chase deals. But if he did, this would be ideal. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 6 Retailers Including Disney Agree to Ditch On-Call Scheduling * The 10 Best Stocks for 2019 -- So Far * 7 Small-Cap ETFs to Buy Now Compare Brokers The post 7 Ways to Make Berkshire Hathaway Stock More Attractive appeared first on InvestorPlace.
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263,000 jobs were added to the market in April, and the unemployment rate fell to 3.6%, the lowest jobless claim since December of 1969.
Warren Buffett says, "All you have to do is just buy a cross-section of America and then never listen to people like me or read the papers or do anything subsequently."
With the new tax law changes all but wiping out itemized deductions, filers are looking for any ways they can to catch a break. Account holders over the age of 70 1/2 are subject to RMDs — required minimum distributions — which is the amount they’re obligated to withdraw from their tax-deferred retirement accounts and pay taxes on. “The government wants its money back,” retirement expert Ed Slott tells Yahoo Finance.
Vanguard is the best-known pioneer of low-cost investing, including in the exchange-traded fund space. But it's hardly alone anymore, as providers such as Schwab, iShares and SPDR have all hacked away at each other with ever-shrinking fees.Still, don't sleep on Vanguard ETFs. While Vanguard isn't always No. 1 among the cheapest index funds in every class, it's still a low-cost leader in several areas, and it's typically one of the least expensive options no matter where you look.And inexpensive does matter. Let's say an investor puts $100,000 apiece in two different funds that both gain 8% annually, but Fund A charges 1% in fees while Fund B charges 0.5%. In 30 years, Fund A will be worth a respectable $744,335 ... but Fund B will be worth $865,775. That's roughly $120,000 lost not just in fees, but also lost opportunity cost from returns that could have been reinvested in the fund.Here are eight low-cost Vanguard ETFs that investors can use as part of a core portfolio. All of these index funds are among the least expensive in their class and offer wide exposure to their respective market areas. SEE ALSO: The 19 Best ETFs for a Prosperous 2019
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