Latest news with #indexfund
Globe and Mail
7 hours ago
- Business
- Globe and Mail
Warren Buffett's Top Recommendation for Investors Could Turn $500 Per Month Into $100,000 in 10 Years.
Warren Buffett is happy to share investment advice with anyone who's interested. His annual letters to shareholders and extended question-and-answer sessions at Berkshire Hathaway 's annual meetings are incomparable sources of wisdom. Buffett has been a great guide for countless successful investors who like to pick great companies, not just great stocks. But the Oracle of Omaha's top recommendation for most investors is to ignore a lot of that and keep things as simple as possible. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » That's because it's often the behavioral challenges of investing in individual companies that trip up those who would otherwise be successful. Buying or selling a great company at the wrong price at the wrong time is a path to underperformance. Here's what Buffett recommends instead. The only investment most people need One of the easiest ways for investors to avoid the behavioral tripwires that can lead to lagging the stock market is to stop trying to outperform the market average in the first place. That's why Buffett's top recommendation for average investors is to put money in an index fund. He prefers the Vanguard S&P 500 ETF (NYSEMKT: VOO). Buffett plans to take his own advice, too. He instructed the executor of his estate to put 90% of his wealth in the index fund after his passing. If you consistently put aside $500 of your paycheck every month, you could be sitting on a six-figure portfolio 10 years from now, even if you're starting from nothing. Buffett doesn't think dollar-cost averaging is for active stock pickers. While he doesn't try to time the market, he does try to value companies. Buying a company's stock without regard for its value (as dictated by a dollar-cost averaging strategy) won't lead to the outperformance stock pickers seek. But when it comes to passive investing, the best way to get the most out of your money is to put all your money into the fund and consistently add to it over time with money from your earnings. Earning average returns for a long time can produce above-average wealth. How $500 per month can create a six-figure portfolio The S&P 500 expanded to a 500-constituent format in March of 1957. Since then, the broad-based index has gone on to produce a compound average annual total return of 10.5%. That return is achieved by reinvesting dividends, which most brokerages allow you to do automatically. If you set up a brokerage account and automatically purchase $500 of the Vanguard S&P 500 ETF every month while reinvesting dividends, here's what you can expect if you earn average returns from the last 70 years. Years Investing Expected Value of Portfolio 1 $6,335 2 $13,335 3 $21,068 4 $29,611 5 $39,050 6 $49,477 7 $60,998 8 $73,726 9 $87,788 10 $103,324 Calculations by author. It's worth pointing out that $500 per month, or $6,000 per year, is less than the annual contribution limit for an IRA. That will ensure you keep your investments tax-deferred or even tax-free. While the Vanguard S&P 500 ETF doesn't have a history of capital gains distributions, investors still have to pay taxes on its income distributions from dividends. Those usually incur a 15% qualified dividend tax, so there's a slight tax drag. But even if you set aside 15% of each dividend distribution, you could end up with a portfolio value north of $100,000 based on average returns. If you contribute the $500 per month to an employer-sponsored retirement plan, you could end up with well over $100,000. That's because most plans include a matching contribution. While you might not have the Vanguard fund available in your plan, most include some low-cost index funds. Even with relatively high fees, that can be the easiest way to build a sizable portfolio for retirement. Charlie Munger, Warren Buffett's Vice Chairman and longtime friend, once told a young investor that the first $100,000 is the hardest. (He used more colorful language.) Once you have $100,000, you can let off the gas a bit because the returns from the portfolio will start to do some of the work for you. Indeed, if all you did was invest $500 per month for 10 years like above and let it sit for another 10 years, you'd have close to $280,000 without adding another penny. Wait 15 more years, and you'll have around $1.25 million. That's the true power of compounding, and it doesn't take any special skills or market timing knowledge to get there. Should you invest $1,000 in Vanguard S&P 500 ETF right now? Before you buy stock in Vanguard S&P 500 ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $891,722!* Now, it's worth noting Stock Advisor 's total average return is995% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025
Yahoo
7 hours ago
- Business
- Yahoo
Warren Buffett's Top Recommendation for Investors Could Turn $500 Per Month Into $100,000 in 10 Years.
Buffett shares a lot of investment advice in his shareholder letters and annual meetings. He recommends one investment for most people, including the executor of his estate. If you consistently add to your portfolio, you could have six figures within a decade of starting. 10 stocks we like better than Vanguard S&P 500 ETF › Warren Buffett is happy to share investment advice with anyone who's interested. His annual letters to shareholders and extended question-and-answer sessions at Berkshire Hathaway's annual meetings are incomparable sources of wisdom. Buffett has been a great guide for countless successful investors who like to pick great companies, not just great stocks. But the Oracle of Omaha's top recommendation for most investors is to ignore a lot of that and keep things as simple as possible. That's because it's often the behavioral challenges of investing in individual companies that trip up those who would otherwise be successful. Buying or selling a great company at the wrong price at the wrong time is a path to underperformance. Here's what Buffett recommends instead. One of the easiest ways for investors to avoid the behavioral tripwires that can lead to lagging the stock market is to stop trying to outperform the market average in the first place. That's why Buffett's top recommendation for average investors is to put money in an index fund. He prefers the Vanguard S&P 500 ETF (NYSEMKT: VOO). Buffett plans to take his own advice, too. He instructed the executor of his estate to put 90% of his wealth in the index fund after his passing. If you consistently put aside $500 of your paycheck every month, you could be sitting on a six-figure portfolio 10 years from now, even if you're starting from nothing. Buffett doesn't think dollar-cost averaging is for active stock pickers. While he doesn't try to time the market, he does try to value companies. Buying a company's stock without regard for its value (as dictated by a dollar-cost averaging strategy) won't lead to the outperformance stock pickers seek. But when it comes to passive investing, the best way to get the most out of your money is to put all your money into the fund and consistently add to it over time with money from your earnings. Earning average returns for a long time can produce above-average wealth. The S&P 500 expanded to a 500-constituent format in March of 1957. Since then, the broad-based index has gone on to produce a compound average annual total return of 10.5%. That return is achieved by reinvesting dividends, which most brokerages allow you to do automatically. If you set up a brokerage account and automatically purchase $500 of the Vanguard S&P 500 ETF every month while reinvesting dividends, here's what you can expect if you earn average returns from the last 70 years. Years Investing Expected Value of Portfolio 1 $6,335 2 $13,335 3 $21,068 4 $29,611 5 $39,050 6 $49,477 7 $60,998 8 $73,726 9 $87,788 10 $103,324 Calculations by author. It's worth pointing out that $500 per month, or $6,000 per year, is less than the annual contribution limit for an IRA. That will ensure you keep your investments tax-deferred or even tax-free. While the Vanguard S&P 500 ETF doesn't have a history of capital gains distributions, investors still have to pay taxes on its income distributions from dividends. Those usually incur a 15% qualified dividend tax, so there's a slight tax drag. But even if you set aside 15% of each dividend distribution, you could end up with a portfolio value north of $100,000 based on average returns. If you contribute the $500 per month to an employer-sponsored retirement plan, you could end up with well over $100,000. That's because most plans include a matching contribution. While you might not have the Vanguard fund available in your plan, most include some low-cost index funds. Even with relatively high fees, that can be the easiest way to build a sizable portfolio for retirement. Charlie Munger, Warren Buffett's Vice Chairman and longtime friend, once told a young investor that the first $100,000 is the hardest. (He used more colorful language.) Once you have $100,000, you can let off the gas a bit because the returns from the portfolio will start to do some of the work for you. Indeed, if all you did was invest $500 per month for 10 years like above and let it sit for another 10 years, you'd have close to $280,000 without adding another penny. Wait 15 more years, and you'll have around $1.25 million. That's the true power of compounding, and it doesn't take any special skills or market timing knowledge to get there. Before you buy stock in Vanguard S&P 500 ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard S&P 500 ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $891,722!* Now, it's worth noting Stock Advisor's total average return is 995% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Adam Levy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy. Warren Buffett's Top Recommendation for Investors Could Turn $500 Per Month Into $100,000 in 10 Years. was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
8 hours ago
- Business
- Yahoo
Those who invested in JSE (JSE:JSE) three years ago are up 59%
By buying an index fund, investors can approximate the average market return. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, JSE Limited (JSE:JSE) shareholders have seen the share price rise 26% over three years, well in excess of the market return (20%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 25% in the last year, including dividends. So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time. JSE was able to grow its EPS at 8.9% per year over three years, sending the share price higher. We don't think it is entirely coincidental that the EPS growth is reasonably close to the 8% average annual increase in the share price. This suggests that sentiment and expectations have not changed drastically. Rather, the share price has approximately tracked EPS growth. The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers). We know that JSE has improved its bottom line lately, but is it going to grow revenue? Check if analysts think JSE will grow revenue in the future. When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, JSE's TSR for the last 3 years was 59%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments! It's nice to see that JSE shareholders have received a total shareholder return of 25% over the last year. Of course, that includes the dividend. That gain is better than the annual TSR over five years, which is 8%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand JSE better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with JSE . But note: JSE may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast). Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on South African exchanges. — Investing narratives with Fair Values Vita Life Sciences Set for a 12.72% Revenue Growth While Tackling Operational Challenges By Robbo – Community Contributor Fair Value Estimated: A$2.42 · 0.1% Overvalued Vossloh rides a €500 billion wave to boost growth and earnings in the next decade By Chris1 – Community Contributor Fair Value Estimated: €78.41 · 0.1% Overvalued Intuitive Surgical Will Transform Healthcare with 12% Revenue Growth By Unike – Community Contributor Fair Value Estimated: $325.55 · 0.6% Undervalued View more featured narratives — Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
9 hours ago
- Business
- Yahoo
Those who invested in JSE (JSE:JSE) three years ago are up 59%
By buying an index fund, investors can approximate the average market return. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, JSE Limited (JSE:JSE) shareholders have seen the share price rise 26% over three years, well in excess of the market return (20%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 25% in the last year, including dividends. So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time. JSE was able to grow its EPS at 8.9% per year over three years, sending the share price higher. We don't think it is entirely coincidental that the EPS growth is reasonably close to the 8% average annual increase in the share price. This suggests that sentiment and expectations have not changed drastically. Rather, the share price has approximately tracked EPS growth. The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers). We know that JSE has improved its bottom line lately, but is it going to grow revenue? Check if analysts think JSE will grow revenue in the future. When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, JSE's TSR for the last 3 years was 59%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments! It's nice to see that JSE shareholders have received a total shareholder return of 25% over the last year. Of course, that includes the dividend. That gain is better than the annual TSR over five years, which is 8%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand JSE better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with JSE . But note: JSE may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast). Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on South African exchanges. — Investing narratives with Fair Values Vita Life Sciences Set for a 12.72% Revenue Growth While Tackling Operational Challenges By Robbo – Community Contributor Fair Value Estimated: A$2.42 · 0.1% Overvalued Vossloh rides a €500 billion wave to boost growth and earnings in the next decade By Chris1 – Community Contributor Fair Value Estimated: €78.41 · 0.1% Overvalued Intuitive Surgical Will Transform Healthcare with 12% Revenue Growth By Unike – Community Contributor Fair Value Estimated: $325.55 · 0.6% Undervalued View more featured narratives — Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
Celcomdigi Berhad (KLSE:CDB) shareholders have earned a 10% CAGR over the last three years
By buying an index fund, you can roughly match the market return with ease. But if you pick the right individual stocks, you could make more than that. For example, Celcomdigi Berhad (KLSE:CDB) shareholders have seen the share price rise 20% over three years, well in excess of the market return (8.3%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 7.1%, including dividends. So let's assess the underlying fundamentals over the last 3 years and see if they've moved in lock-step with shareholder returns. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS). Over the last three years, Celcomdigi Berhad failed to grow earnings per share, which fell 6.8% (annualized). So we doubt that the market is looking to EPS for its main judge of the company's value. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics. It may well be that Celcomdigi Berhad revenue growth rate of 27% over three years has convinced shareholders to believe in a brighter future. In that case, the company may be sacrificing current earnings per share to drive growth, and maybe shareholder's faith in better days ahead will be rewarded. You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values). Celcomdigi Berhad is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates. It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Celcomdigi Berhad's TSR for the last 3 years was 33%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments! It's nice to see that Celcomdigi Berhad shareholders have received a total shareholder return of 7.1% over the last year. Of course, that includes the dividend. That's better than the annualised return of 1.7% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 2 warning signs for Celcomdigi Berhad you should be aware of, and 1 of them is significant. If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation). Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Malaysian exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
