Unsurprisingly, it has been a golden era for American stocks.

The index is up an impressive 221% in the past 10 years, equating to annualised returns of 12.37% a year. And that doesn’t even include reinvested dividends, which can significantly boost long-term returns. While dividends in the US tend to be lower than in the UK — averaging around 2% — they still add valuable compounding power when reinvested.

Aiming for optimal S&P 500 exposure

The simplest way to capture the full benefit of S&P 500’s growth is through a tracker fund – especially one with accumulating dividends. 

Two of the most popular options are the Vanguard S&P 500 ETF (LSE: VUSA) and the iShares Core S&P 500 ETF, both of which have returned around 270% in the past decade.

The Vanguard ETF in particular has become a favourite of many investors. It uses a passive indexing approach, meaning it is market-weighted to try to replicate the S&P 500. Roughly 27% of the fund is concentrated in the top five companies, which include Nvidia, Apple, Microsoft, and Amazon.

One of its biggest attractions is cost. The ongoing charge is just 0.07%, which is tiny compared to actively managed funds. Over the past decade, it has delivered impressive annualised returns of 15.16%.

Of course, there are risks. The ETF is concentrated in US companies, with tech giants dominating. This presents both sector and regional risk. For UK investors, returns are also exposed to currency swings between the pound and the dollar. And like any passive fund, it doesn’t offer any defensiveness in a market crash.

Calculating returns

So how much would a lump sum of £10k have grown in the past decade? If invested in the Vanguard S&P 500 ETF in August 2015, it would now be worth roughly £34,600. That’s the kind of compounding effect billionaire investor Warren Buffett often talks about – steady growth, boosted by reinvested dividends, doing its work over time.

Personally, I think the Vanguard S&P 500 ETF is one of the best ‘set-and-forget’ funds to consider. It gives instant exposure to the entire US market in one simple pick. For newer or passive investors, it saves the headache of analysing individual stocks while avoiding the risk of making bad choices. 

That said, an experienced investor with a knack for stock picking could still outperform it by building their own portfolio.

How’s the FTSE 100 doing?

By comparison, the FTSE 100 has been sluggish. A £10,000 investment in the UK’s benchmark index would have grown just 33% in the past decade. However, dividends make a world of difference here. Using an accumulating FTSE 100 tracker fund, such as the Vanguard FTSE 100 UCITS ETF, the return rises to 61.8%.

That still lags the S&P 500 by a wide margin, but it highlights the power of reinvesting dividends, particularly in a market like the UK where payouts are more generous.

For me, the contrast reinforces why the S&P 500 remains such a powerful engine of wealth creation.

The post Here’s how much £10,000 invested in the S&P 500 a decade ago would be worth today… appeared first on The Motley Fool UK.

But did UK investors actually follow this mantra when the market tanked in early April? Or did they sell up and sit on the sidelines instead?

Shopping for bargains

According to AJ Bell, UK investors did in fact pile into stocks on its platform. The data shows that customers buying investments outnumbered sellers by two to one between 3 and 10 April.

I find this encouraging, as all the research does indeed say that the best time to snap up bargains is during periods of extreme fear and uncertainty. And we got plenty of that after President Trump’s ‘Liberation Day’ announcement — for nearly a week, the only thing liberated in my portfolio was a lot of value!

So, what were AJ Bell’s DIY investors buying during the carnage? Here’s the top 10 net buys in the first week after Trump’s bombshell.

My thoughts

Legal & General and BP don’t surprise me, as their dividend yields spiked to 9% and 7% respectively during the sell-off.

On the growth side, AI juggernaut Nvidia from the S&P 500 is hardly a shocker. For the record, I also added Nvidia to my ISA when the share price dropped beneath $100.

I can’t say I’m surprised to see Rolls-Royce also made the cut (just). The engine maker has been on the most-bought shares list almost constantly for two years now. However, this wasn’t one I was personally adding to in early April.

The most bought UK stock was Barclays, which is a little bit of a head-scratcher for me. Banks would likely see rising bad debts during a global recession, while the 3%-ish yield would hardly provide much solace.

Then again, I’ve never owned Barclays shares, and therefore missed out on the 100%+ rally that began in late 2023. And since bottoming out on 9 April, they’ve rebounded nearly 23%. So, as things stand, these savvy investors were right to pile into the FTSE 100 bank.

Buying the haystack

As we can see though, the S&P 500 stocks that investors were piling into was…all of them!

That’s because the overwhelming majority of buyers were investing in an S&P 500 tracker fund or global index (also dominated by US stocks). The most popular was the Vanguard S&P 500 UCITS ETF.

Therefore, these investors were doing exactly what John Bogle, the founder of Vanguard, once advised: “Don’t look for the needle in the haystack. Just buy the haystack.”

The S&P 500 is dominated by tech giants like Apple, Microsoft, Amazon, and Meta. However, each one has its own risks. For Apple, it’s going to be very costly to move its manufacturing base out of China. Meanwhile, Meta’s digital advertising empire would likely suffer during an economic downturn.

So the index isn’t out of the trade-war woods yet, and could easily pull back sharply again in the months ahead.

Nevertheless, given their dominance, I’m not surprised that investors are backing these tech giants to recover. Indeed, the S&P 500 index has already climbed 10.7% since 8 April — proving their bullishness correct, at least so far.

The post UK investors piled into these S&P 500 stocks during the Liberation Day sell-off… appeared first on The Motley Fool UK.

Based solely on share price growth, it means that an investor who put £20k into an S&P 500 tracker fund at the start of 2020 would now have around £38k. Throw in the dividends and the impact of a stronger US dollar, and the investment would have doubled!

Animal spirits on Wall Street

Stepping back, I find this remarkable given what’s happened in this time. We’ve had the pandemic, wars in the Middle East and Eastern Europe, a bear market in 2022, rampant inflation, high interest rates, and deteriorating relations between the world’s two superpowers.

Offsetting all that, of course, has been the artificial intelligence (AI) revolution. Chipmaker Nvidia has added a staggering $3trn to its market capitalisation in this period, while the already-established tech giants have all reached new heights.

A more recent factor has been the election of the Trump administration. It is promising to boost economic growth, cut taxes, and deregulate industries of the future. In other words, unleash animal spirits (not that Wall Street needs any more).

Low-cost ETF

This showing from the S&P 500 has proven Warren Buffett right. In early 2020, he said: “In my view, for most people, the best thing to do is to own the S&P 500 index fund“.

One of the most popular ways of doing this in the UK is through Vanguard S&P 500 UCITS ETF (LSE: VUSA). This has been the most popular exchange-traded fund (ETF) on AJ Bell‘s platform in the past month.

It’s easy to see why, given the strong performance and no-hassle exposure it gives to all the biggest AI players. That includes Microsoft, Nvidia, Amazon, Alphabet, Meta, Palantir, and so on.

This Vanguard ETF is also very low cost, which is attractive for investors.

What about the next five years?

Looking ahead to the next five years though, I find it hard to see an investment in the S&P 500 doubling.

That’s due to the starting valuation. The S&P 500’s Shiller P/E ratio, which measures the price-to-earnings ratio based on inflation-adjusted average earnings over the past 10 years, is now above 38. There aren’t many times in history it has been so high. 

Therefore, it wouldn’t take too much to trigger a sharp sell-off. That could be a global trade war, rising inflation, or a black swan event that few see coming.

Meanwhile, China making a move on Taiwan would plausibly lead to a stock market crash. Or at least a crash among big tech names that rely on Taiwan for semiconductors, which is most of them.

Over the past decade, the vast majority of active fund managers have failed to outperform the US stock market. This is due to the rise and extraordinary concentration of a handful of tech stocks. The downside to this is that the index today offers far less diversification.

My preference is to selectively invest in individual shares that I think can beat the S&P 500 average over the next few years. With the index now at an historically high valuation, I’m sticking to this strategy.

The post £20,000 invested in the S&P 500 at the start of 2020 is now worth this much… appeared first on The Motley Fool UK.

Wondering what lies in store for the index in 2025? Here’s a look at some of the latest forecasts from Wall Street analysts.

Further gains on the horizon?

In the table below, I’ve put the 2025 S&P 500 forecasts from seven major financial institutions. Note that these are year-end targets:

Looking at the figures in the table, Deutsche Bank has the highest forecast at 7,000. The average of the seven firms however, is 6,624.

Given that the S&P 500’s trading at 6,047 today, it’s clear that the consensus view is that the bull market will continue. Looking ahead, it seems firms expect the index to rise another 10% or so over the next year and a bit.

I’m bullish

I think that’s reasonable. For a start, economic conditions in the US are likely to be healthy next year (Donald Trump’s economy-friendly).

Secondly, we’re in the midst of a powerful tech revolution, which is helping a lot of companies generate top and bottom-line growth. Additionally, there’s room for the market rally to broaden out.

Of course, there are no guarantees the bull market will continue. In the short term, the stock market’s very unpredictable. If we were to see an unexpected ‘black swan’ event, the index could fall.

How to gain exposure

But let’s say the US market does rise next year. What are the best ways to get exposure to it? Well, one option to consider is a S&P 500 index fund such as the Vanguard S&P 500 UCITS ETF (LSE: VUSA).

This product”s designed to track the index. So if the S&P 500 rises, it should rise too.

It’s worth noting that with this ETF, exchange rates can affect returns for UK investors due to the fact that it tracks a US index. For example, if the S&P 500 was to rise 10% in 2025 but the pound gained 3% against the US dollar, returns for UK investors would only be around 7% (ignoring trading and platform fees).

Overall though, there’s a lot to like about this product, in my view. Not only does it provide exposure to all the fantastic stocks in the S&P 500 (eg Apple, Microsoft, Nvidia, etc) but annual fees are very low at 0.07%.

Of course, another option to consider is investing in individual S&P 500 stocks. This approach is riskier, but there’s potential for larger gains.

I have no doubt that there will be plenty of stocks that outperform the S&P 500 by a wide margin next year and deliver gains of 20%, 30%, 50%, or more. Some US stocks I’m bullish on include Amazon, CrowdStrike, and Uber (if you’re looking for more US stock ideas you can find plenty here at The Motley Fool).

I’ll point out that there’s nothing to stop investing in a tracker fund and buying a few individual stocks in the hope of generating higher returns. This is what I do, and the strategy has worked well for me in recent years.

The post Here are analysts’ S&P 500 forecasts for 2025 appeared first on The Motley Fool UK.

Here, I’m going to share my top tip for ISA investors. This concept has improved my returns dramatically and I’m confident that it can do the same for others.

My top tip

It’s not hard to find investing tips these days. Compared to when I started investing in the early 2000s, there’s far more information available, which is great.

Some common tips one often hears are:

• Think about your goals and risk tolerance before investing.
• Diversify your portfolio to minimise risk.
• Invest on a regular basis to average into the market.
• Take a long-term view (five years or longer).
• Be greedy when others are fearful.

These are all great tips. They can all help investors have more success.

If I had to list my top tip, however, it would be this – take a global approach to investing. In other words, don’t just stick to UK shares.

Home bias

‘Home bias’ is common in the investment world. This is a phenomenon where investors stick to investments in their home country.

It’s very common here in the UK. Today, a lot of British investors tend to stick to well-known Footsie stocks like Lloyds and BP, as that’s what they’re most comfortable with.

The problem is that this approach can limit one’s returns. Unfortunately, the UK stock market is quite small, and it’s lacking in key areas such as technology.

This is reflected in the performance of the FTSE 100. Over the five-year period to the end of October, it delivered an annual return of 6%.

By contrast, America’s S&P 500 index delivered an annual return of 15.3% over that period. By allocating capital to US shares, investors could have potentially improved their returns significantly.

Big gains

When I started taking a more global approach to investing about six years ago, my returns improved dramatically.

One of the first international stocks I bought was tech giant Apple. Since I bought it, it has risen about 450%.

A few years later, I bought shares in Nvidia. Since my first purchase here, they’ve risen about 620%.

There aren’t many UK stocks that have produced these kinds of returns in recent years. So, I’m glad I adopted a more global approach to investing.

Easy access

It’s worth pointing out that if one is looking for international exposure but hesitant to buy individual stocks, tracker funds can be a good option to consider.

An example here is the Vanguard S&P 500 UCITS ETF (LSE: VUSA). This provides exposure to the S&P 500 index meaning that one gets access to 500 different US-listed companies.

Stocks in the ETF include the likes of Apple, Nvidia, and Amazon. So, there are some world-class companies in it.

And ongoing fees are very low at just 0.07%. Overall, there’s a lot to like.

Of course, like every investment, this ETF has its risks.

One is that there’s quite a lot of technology exposure. If growth in this sector slows, this ETF could underperform.

Another risk is exchange rates. If the pound strengthens against the US dollar, returns for UK investors could be eroded.

Taking a long-term view, however, I expect it to do well.

The post My number 1 tip for Stocks and Shares ISA investors appeared first on The Motley Fool UK.

Underperforming the market

It has been a while since Fundsmith beat the market on an annual basis. The last time was in 2020 when it returned 18.3% versus 12.3% for the MSCI World index.

I’ve put the returns since then in the table below. As you can see, it’s lagged the MSCI World index significantly since 2022.

This underperformance is disappointing. Especially when you consider the fund has ongoing charges of 0.94% on Hargreaves Lansdown (my broker).

The problem

The issue here’s pretty clear – Fundsmith’s an underweight mega-cap technology stocks and this is hurting its performance. In recent years, these stocks have generated huge returns. And Fundsmith hasn’t fully participated in the rally.

It does have large positions in Microsoft and Meta Platforms, has a growing position in Alphabet and a small holding in Apple. But it doesn’t have exposure to Amazon (it did buy this stock a few years ago but sold it at the wrong time), Nvidia, or Tesla.

More tech exposure

Buying an S&P 500 tracker fund like the Vanguard S&P 500 UCITS ETF (LSE: VUSA) would solve this issue.

This product would give me a ton of exposure to mega-cap tech stocks such as Apple, Nvidia and Amazon as these kinds of stocks have large weightings in the S&P 500, as the table below shows:

Source: Vanguard

And I’d get them all for a low ongoing fee of just 0.07%. Additionally, my platform fees with Hargreaves Lansdown would be lower.

New risks

Having said that, buying this ETF would expose me to new risks. For starters, there would be more geographic risk. With an S&P 500 tracker, 100% of the product’s allocated to the US market. With Fundsmith – which is a global equity product – the US represents about 73% of the portfolio currently.

It’s worth noting here that the US market has had a huge run over the last two years and it now looks quite expensive. So there’s a chance we could see some volatility at some point in the near future.

There would also be more technology sector risk for me. I already own shares in five of the ‘Magnificent 7’ directly, so if I were to buy this ETF, my portfolio could take a big hit if the tech sector had a meltdown (which seems to happen every few years).

In theory, holding on to Fundsmith should provide me with some protection against a US market or Tech sector meltdown. But there are no guarantees here, of course.

My move now

For now, I’m going to hold on to Fundsmith. I like the fund’s focus on quality stocks and I see it as a good hedge against mainstream market risks.

That said, I will be watching the performance closely. For the fees I’m paying, it needs to start delivering again.

The post Should I dump my holding in Fundsmith and buy an S&P 500 tracker instead? appeared first on The Motley Fool UK.

There have been many reasons for this surge, ranging from artificial intelligence (AI) excitement and falling interest rates to bullishness about the US election result.

The S&P 500 is now into the third year of its current bull market.

However, valuations have become stretched and an increasing number of market watchers are starting to sound the alarm. Given all this, would it be sheer madness for me to invest in the S&P 500 right now?

Bull market cycle

Growth investor Sir John Templeton once said: “Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.”

Stepping back, I think we can broadly see these stages playing out:

• Pessimism: in late 2022, the bull market started after the devastating financial and public health impact of the pandemic.
• Skepticism: in 2023, concerns remained about high inflation, supply chain disruptions, and geopolitical tensions. Yet the S&P 500 continued to rise.
• Optimism: the S&P 500 reached a new record high in early 2024, driven by the ‘Magnificent Seven’ tech stocks and the revolutionary potential of AI.
• Euphoria: Donald Trump is elected, promising pro-growth policies, deregulation and tax cuts. The S&P 500 shoots above 6,000 for the first time in history.

Raging bulls

But are we really in late-stage euphoria? After all, the average bull market lasts longer than two or three years (around five, on average, in fact).

Nobody really knows for certain what happens next. But the index’s price-to-earnings (P/E) ratio is now approaching 30. This isn’t far off the peak reached during the dot-com bubble, a period of excessive speculation in tech stocks that didn’t end well.

The FTSE 100 index isn’t an apples-to-apples comparison to the S&P 500 because it lacks giant tech companies that command higher valuation multiples. Still, a P/E ratio of nearly 30 appears extreme next to the FTSE 100’s 15.

Looking around, I see some crazy individual valuations. Palantir Technologies, for example, is trading on a price-to-sales (P/S) ratio of 54 and a forward P/E multiple of 128.

Meanwhile, Tesla stock has jumped 41% in a month, putting it on a forward P/E ratio of 93. Even Tesla bulls are scratching their heads at the magnitude of this rapid rise!

Utter madness?

The Vanguard S&P 500 UCITS ETF (LSE: VUSA) is the most popular exchange-traded fund (ETF) among investors at Hargreaves Lansdown. Given the index’s stellar performance, that’s hardly surprising.

Around a third of my portfolio is invested in S&P 500 companies, and I’m happy with that allocation.

If this wasn’t the case though, I don’t think it’d be silly for me to buy a small slice of this S&P 500 tracker right now. But only assuming I was committed to investing for years rather than months.

After all, a sharp pullback could be just around the corner given the historically high valuation.

Longer term, however, I think the tech stocks dominating the index have tonnes of potential. We’re living through a powerful digital/AI revolution, and the companies at the very centre of it are all in the S&P 500.

The post Would it be pure madness to pile into the S&P 500? appeared first on The Motley Fool UK.

I’d be over the moon to get that from a single stock, never mind a large-cap index.

What’s going on?

A number of factors have come together to produce this stellar performance, including the avoidance of a US recession and the anticipation of falling interest rates.

However, the fuel on the fire has been the rise of generative artificial intelligence (AI) following the launch of ChatGPT in November 2022. This triggered a tidal wave of capital expenditure from the giant cloud platforms, as they feared being left behind in potentially the biggest tech revolution since the internet.

Chipmaker Nvidia has been the big winner, with its share price rocketing around 1,000% in two years. As one analyst put it last year: “There’s a war going on out there in AI, and Nvidia today is the only arms dealer.”

In September, it was reported that Nvidia alone had accounted for approximately 25% of the S&P 500’s year-to-date gains!

The hypothetical gains

So, what if I’d stuck 10 grand into the S&P 500 index five years ago? Well, assuming it was the popular Vanguard S&P 500 ETF (LSE: VUSA), then my return would have been around 108%. That’s with dividends.

So, I’d have £20,800 (not including fees), which would be an incredible return. However, it’s worth remembering this is well above the historical average of around 10.7% per year.

A handful of giants

Given the speed of this rise, I think there are things to consider. Many S&P 500 stocks are pricey and could be due for a sharp pullback, particularly if the forthcoming US election ends in a contested outcome.

Plus, there’s a high level of concentration at the top of the index. Here are the Vanguard ETF’s 10 largest holdings, as of 30 September.

The top 10 comprise around 34% of the total. This very high concentration is due to the largest companies dominating the index with their mammoth market caps.

Where next?

Earlier this month, strategists at Goldman Sachs raised their target on the index to 6,000 by December (2.7% higher). I note this was their fourth increased adjustment since last year, so price forecasts are always worth taking with a healthy bucket of salt, in my opinion.

However, it does indicate that most of Wall Street remains upbeat. Perhaps that’s not surprising, given that the average S&P 500 bull market has tended to run for around five years, and we’ve only just entered the third year of the current one.

Of course, history’s no reliable indicator of what’s to come.

My preferred alternatives

I don’t have an S&P 500 ETF in my portfolio. If I wanted to invest in one though, I’d probably go for an equal-weighted version that gets regularly rebalanced.

This means the fund allocates the same weight to each stock, regardless of company size, providing broader diversification and reducing concentration risk.

Another option could be the iShares MSCI USA Quality Factor ETF. This focuses on a sub-set of high-quality US stocks with strong and stable earnings. Incredibly, it’s even outperformed the S&P 500 in recent years!

The post If I’d invested £10,000 in the S&P 500 five years ago, here’s what I’d have now appeared first on The Motley Fool UK.

However, it’s not my preferred method of generating extra income. Mine’s investing in stocks and funds, allowing my annual returns to compound until my portfolio reaches a point at which it can generate a significant passive income.

Of course, there’s a caveat here. A varied portfolio doesn’t just mean different stocks, funds, and bonds, in my opinion. For me, a larger portfolios should include various asset classes. This may include a buy-to-let property. Alternative asset classes can include land, cars, and watches.

Let that £99 compound

For those of us new to investing, the way to start is by opening an account with a major brokerage platform like Hargreaves Lansdown, AJ Bell, or Interactive Investor. This allows me to invest my money into companies, funds, and even buy government debt. If I’m investing within a Stocks and Shares ISA, my returns are protected from tax.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

So how does £99 a month compound? Well, to start with I’d need to be making sensible investments that actually perform well. Many novice investors lose money because their investments aren’t built on sound analysis. As such, a sensible place to start could be index-tracking funds.

These are funds that track the performance of major indexes like the FTSE 100 or the S&P 500. Over the last 10 years, the S&P 500 has delivered average annual returns of 12.9%, including dividends, as of August.

While 12.9% would be a very strong return over the long run, the below chart shows how £99 a week could compound if it did achieve these very strong returns.

After 30 years of investing £99 a week, my portfolio would be worth more than £1.8m, enough to generate at least £90,000 annually in passive income through dividend payments.

Where to put my money?

The Vanguard S&P 500 UCITS ETF GBP (LSE:VUSA) is one of the most popular exchange-traded funds (ETFs) for UK-based investors and is worth considering.

This ETF tracks the performance of the S&P 500 index, which comprises 500 of the largest US companies by market capitalisation. 

It employs a passive management approach, aiming to replicate the index by investing in all or substantially all of the stocks that make up the S&P 500, holding each stock in approximately the same proportion as its weighting in the index.

While this is broadly seen a relatively low-risk investment, the S&P 500 fluctuates with the US and global economy. A severe downturn in US economic fortunes would likely result in the value of the investment falling.

However, over the long run, the US economy and US-listed stocks have performed remarkably well. Investors bet against the US at their own peril.

The post How I’d invest £99 a week and aim to earn £90,000 of passive income every year appeared first on The Motley Fool UK.

For the last decade, I’ve been investing in UK and US stocks as part of my strategy to build a portfolio large enough to support me through my retirement. Needless to say, the money invested over that period has added up over time.

However, millions of Britons are sitting on savings that won’t deliver life-changing returns over the long run due to negative real rates. So with £25,000 in savings, I could look to put that money to work by investing in stocks and funds.

While investing may sound inherently more risky to many people, a well-diversified portfolio can actually help manage risk over the long term. Here’s how it’s done.

Mitigating risk

Funds, ETFs (exchange-traded funds), and trackers offer cost-effective ways to spread investments across multiple companies, sectors, and geographical regions.

This allows us as investors to mitigate the impact of poor performance from any single investment. These instruments also allow investors to gain broad market exposure, possibly balancing between US, UK, and global markets.

Historically, stock markets have shown strong long-term growth potential. From 1900 to 2023, US stocks returned 6.4% annually in real terms, while UK stocks delivered 5.3%.

Looking at slightly more recent statistics, the S&P 500, a benchmark for the US stock market, has delivered an average annual return of about 10.7% since its introduction in 1957.

This outpaces inflation and many other forms of investment. We can gain access to these returns by simply investing in trackers funds or purchasing shares in sector specific funds.

Taking this 10.7% rate of return and assuming I can replicate that over the coming decades, it would take 20 years for me to turn my £25,000 into a portfolio that could deliver £12,000 a year.

A sensible choice

There are many ways to invest, and this depends on circumstances and on our objectives. Personally, given my profession and the fact that I put money into my ISA monthly, I prefer to pick one or two new stocks every month — often re-picks.

However, if I were starting investing with a lump sum today, I’d consider spreading my money across funds and ETFs, like the Vanguard S&P 500 UCITS ETF GBP (LSE:VUSA).

It’s among the most popular ETFs for good reason. It simply tracks the performance of the S&P 500 index, offering European investors easy access to the US stock market. It provides exposure to 500 of the largest US companies, representing about 80% of the US equity market capitalisation.

It also stands out for its low cost, with an expense ratio of just 0.07%, significantly lower than many actively managed funds. It’s highly liquid, making it easy for investors to buy and sell shares without incurring large spreads or transaction costs.

Of course, even the most diverse of funds can go down as well as up. Recessions, trade wars, and actual wars could also negatively impact the performance of US stocks, and this ETF. Nonetheless, short, medium, and long-term performance has been very strong.

The post £25k in savings? Here’s how I’d try and turn that into passive income worth £12k a year appeared first on The Motley Fool UK.