Should You Leverage The S&P 500 In Your Portfolio

SPY ETF

 

Recently I sat down to think of possible improvements that I can make that will enhance the performance of my retirement investment portfolio.  Like most people, I have significant exposure to the greater U.S. equity markets with approximately 45% of my portfolio invested in large capitalization equities, which are components of the S&P 500 Index.

S&P 500

The S&P 500 Index tracks the combined performance of the 500 largest companies in the U.S.  So, buying a share in a mutual fund or Exchange-Traded Fund (ETF) that has an investment mandate to mirror the S&P 500 will give you returns equal to the index, less any fees and expenses related to managing the portfolio.  In other words, if I hear someone say “the S&P 500 went up 2% today”, then it is highly probable that about 45% of investment portfolio increased in value by 2% as well.

Now, I am quite certain that for the foreseeable future my portfolio will continue to have significant S&P 500 Index exposure.   Therefore, whether I know it or not, I am effectively saying, “I believe that investing in an S&P 500 Index Fund is going to give me the necessary long-term returns to fund a significant … Read the rest

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