5 ETFs That Are All You Need for Retirement – Buffalo News

With this and other funds you consider, do a little research into them to see what, exactly they own and what they charge in fees, etc. (In general, index funds — funds that track various indexes — sport very low fees.)

One thing you’ll notice about a standard S&P 500 index fund, such as this one, is that while it holds hundreds of companies, some of them are so big that they dominate it. The index’s top 10 holdings, for example, which include Apple, Microsoft, and Amazon, make up around 29% of its entire value. That’s because the index is market-cap weighted, meaning the companies with the largest market value have an outsize influence on the index’s value. You can imagine that the last 100 or even 200 holdings make up a small chunk of the index’s value.

You might remedy this by investing instead in an equal-weighted S&P 500 fund, such as the Invesco S&P 500 Equal Weight ETF — though its long-term performance has lagged the Vanguard S&P 500 ETF.

2. A total U.S. stock market fund

An S&P 500 index fund is terrific, but it doesn’t exclude the many smaller companies in America, such as Kohl’s, Mattel, The New York Times, Harley-Davidson, and homebuilder Toll Brothers. If you’d like your financial fortunes tied to just about all companies on the major American stock exchanges, consider investing in a total U.S. stock market ETF, such as the Vanguard Total Stock Market ETF (NYSEMKT: VTI).

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