Suze Orman Says Retirement Investors Should Hold This ETF

You might think that saving for retirement is a huge challenge. But it’s not the only challenge you’ll face.

It’s not enough to put money into a retirement account. You also need to figure out how to invest that money so it can grow into a larger sum over time.

Remember, through the years, living costs tend to rise due to inflation. You need to invest your retirement savings in a way that’s likely to outpace inflation.

That’s why many financial experts recommend putting money into the stock market while you’re in the process of building retirement wealth. But if you don’t know much about investing, that can be tricky.

Thankfully, there’s one investment Suze Orman recommends that’s pretty much suitable for everyone. And holding it in your portfolio could make it a lot easier to meet your financial goals.

Why it pays to invest in the Vanguard S&P 500 ETF

The Vanguard S&P 500 ETF (VOO) is an exchange-traded fund whose goal is to track and match the performance of the S&P 500 index. The S&P 500 is an index that consists of the 500 largest publicly traded companies by market capitalization.

There are a number of reasons why it could pay to invest your retirement savings in VOO.

First, it simplifies things. If you’re nervous about building your own portfolio of individual stocks, you could instead fall back on an asset like VOO that eliminates the stress and guesswork.

Secondly, VOO gives you instant diversification. You’re putting your money into the 500 largest public companies today, which means getting exposure to different industries.

Finally, you won’t be looking at costly fees with VOO. With an expense ratio of just 0.03%, you’re paying very little for a solid investment that makes your life easier.

It’s for these reasons that Orman is a fan of VOO. And you may want to consider putting money into it as well.

Some drawbacks to consider

While you may find that VOO is a great investment for you, there are some drawbacks to think about.

First, while VOO gives you access to the 500 largest publicly traded companies, it’s not a total stock market ETF. This means there are small and medium companies you’re missing out on.

Secondly, the companies with the highest market values carry the most weight in the S&P 500. This means that if those companies take a hit, you could end up seeing losses in your portfolio if it’s heavily concentrated in VOO.

Additionally, with VOO, you’re taking on the general risks that come with having money in stocks. You may want to limit the extent to which you invest in it as retirement gets closer.

Finally, VOO won’t make it possible to beat the stock market on a whole. That could mean limiting your portfolio returns.

Still, VOO is worth considering if you’re new to investing or aren’t sure where to put your money. If that’s the case, though, then it could also pay to sit down with a financial advisor for guidance. An advisor can look at your income, savings, age, and goals to come up with an investment strategy that works for you.