Whether you’re an experienced investor or are just getting started in the stock market, choosing the right investments is key to generating wealth — and it can make the difference between losing money and building a million-dollar portfolio.
Choosing the right investments isn’t easy, however. There are thousands of investments to choose from, and each one has its own unique advantages and disadvantages. It can be overwhelming, then, to narrow down your options.
While everyone’s situation will be different, there are some investments that are so strong they’re a good fit for nearly anyone. These three options are fantastic choices, and they can make a solid addition to anyone’s portfolio.
1. S&P 500 ETFs
The S&P 500 is a stock market index that includes stocks from 500 of the largest companies in the U.S. An S&P 500 ETF, then, is an investment that follows the S&P 500 index and mirrors its performance.
S&P 500 ETFs are a strong investment for several reasons. For one, they can help you create an instantly diversified portfolio with zero effort. To limit your risk, it’s wise to make sure you’re investing in at least a couple dozen stocks from different industries. When you invest in just one S&P 500 ETF, you instantly own around 500 stocks from a wide variety of sectors.
This type of investment is also perfect for those who are concerned about stock market volatility. The S&P 500 itself is subject to short-term market turbulence, and it has seen its fair share of corrections and crashes over the years.
^SPX data by YCharts
However, it’s consistently recovered from those downturns. S&P 500 ETFs will also experience short-term volatility, but it’s extremely likely they will earn positive returns over the long run.
If you’re ready to get started, there are a few popular S&P 500 ETFs that can be a great addition to your portfolio:
2. Growth ETFs
A growth ETF includes stocks that are likely to experience faster-than-average growth. Some growth ETFs contain stocks from just one industry, such as the tech sector, while other funds span multiple industries.
One of the biggest advantages of investing in a growth ETF is that you have a better chance of beating the market. Fast-growing companies tend to see higher returns, so your investments are likely to grow faster with this type of fund compared to a broad-market fund such as an S&P 500 ETF.
The downside, however, is that growth ETFs can be more volatile. Growth stocks are sometimes riskier than stocks from more …….