Here’s a continuation of a sample chapter from my latest book Exchange-Traded Funds Investing For Beginners.  The book has been well received, so I’ll post a number of other excerpts for your review in future posts.

And if they interest you, you can review the book for free right here.

That said, here’s an excerpt from the chapter entitled Different Types Of ETF Investments.  It begins like this…

SPY – SPDR® S&P 500 ETF
Investing in the S&P 500 ETF is also like investing in the overall stock market, but even more so.  Because the fund is made up of 500 prominent, blue chip companies in the US.  Blue chip companies are nationally recognized, financially sound and well-established companies. They typically sell high-quality, widely accepted products and services, many of which you will probably recognize.

This ETF will also sound familiar to you from our discussion on diversification in Chapter 3.  It’s not as old as DIA, but it is the largest ETF with $381 billion assets under management.  That’s over a third of a trillion dollars.  And it has the most shares traded daily of all of the ETF’s.

It follows the Standard & Poor’s 500® Index.  And it pays a 1.58% dividend which is about average.  And it has a low net expense ratio of 0.09%.

So it represents a large cross section of the market, is low cost, and pays a dividend.  And it’s been around since 1993, so it’s well established.  And the S&P 500 is constantly reported in the news also – so it’s easy to keep track of.

And while it is the oldest and largest, due to its internal structure some analysts feel there are better, more efficient choices for individual investors.

That said, note that well known billionaire investor Warren Buffett recommends that most retail investors allocate much of their stock portfolio to an S&P 500 ETF, instead of taking the risk of picking individual stocks.  And he owns some SPY in his Berkshire Hathaway portfolio.

Indexed to: Standard & Poor’s 500® Index.
Expense Ratio: 0.09%
Total Assets: $381 billion
Annual Dividend Yield: 1.58%
P/E ratio: 20.55
Fund Inception: 01/22/1993
Top Holdings:

• AAPL        Apple Inc
• MSFT        Microsoft Corp Technology
• AMZN       Amazon.com Inc
• NVDA        NVIDIA Corp
• TSLA         Tesla Inc
• BRK.B        Berkshire Hathaway Inc Class B
• GOOGL      Alphabet Inc Class A
• GOOG        Alphabet Inc Class C
• XOM          Exxon Mobil Corp
• UNH          UnitedHealth Group Inc        Healthcare

So that’s the SPY – SPDR® S&P 500 ETF.  It’s quite well known and the largest ETF.  It’s constantly reported in the news also – so it’s easy to track.

In our next post, we’ll look at another ETF.  And it’s one of the cheapest ETFs with an expense ratio of just 0.03%.  And no surprise, Warren Buffett owns it too.  In fact, it’s the only other ETF he owns.

That said, if you found this sample chapter excerpt interesting, you can check out the  book for free right here.