Best investment options to invest in the US stock market
The US stock market crash of 2022 may be looked upon by many investors as an opportunity to create wealth over the long term. If picking individual stocks is not your cup of tea, a better way is to simply pick up an exchange-traded fund (ETF) to invest in. One of the best reasons to invest in US stocks via ETFs is the ease of investing without having to worry about the right selection of stock. Buying individual stocks may be a tough nut to crack for most retail investors, and hence ETF investing is a better way forward. As opposed to purchasing individual stocks, you ultimately purchase a number of stocks that either reflects an index or a certain sector. US ETFs give you the benefit of diversifying in stocks to maintain a well-diversified portfolio, covering everything from technological growth to value stocks to large-caps to small-caps.
An ETF is a mutual fund variant that follows a certain index, while very few of them are actively managed. ETFs are low-cost investments that enable one to gain exposure to multiple stocks belonging to the same index simultaneously. Only on a stock exchange during trading hours the investor can buy or sell the ETF’s units.
Here are three ETFs tracking large-cap stocks of US markets
S&P 500 ETF
If you wish to own every stock listed on the S&P 500 index, you may consider buying SPDR S&P 500 ETF Trust, also known as SPY ETF in the US stock market community. The low expense ratio of 0.0945% of the SPDR ETF is one of its appealing features. The lower the ratio, the better for the investor because costs reduce returns.
In terms of price and yield performance, the SPDR S&P 500 ETF Trust aims to deliver investment returns that, before costs, broadly match the S&P 500 Index. This means that as an SPDR S&P 500 ETF Trust investor, you can simply anticipate returns consistent with those produced by the S&P 500 index.
You gain exposure to some of the well-known names in the US stock market by investing in SPDR S&P 500 ETF Trust. The best businesses in the world, like Microsoft, Apple, and Amazon, as well as Meta (parent company of Facebook), Berkshire Hathaway, Visa, and many others, can be a part of your portfolio. You can purchase SPY ETF using a brokerage account registered in the US, much like you would when purchasing equity shares.
Also Read: US stock market sheds over 8% in September
Nasdaq 100 ETF
The Invesco QQQ Trust (QQQ), an exchange-traded fund that follows the Nasdaq 100 Index, is one such ETF that gives you access to all index companies with a single investment. QQQ’s five largest holdings are Apple, Microsoft, Amazon, Meta (Facebook), and Tesla. By buying units of QQQ, you are taking exposure in 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization.
Dow 30 ETF
SPDR Dow Jones Industrial Average ETF Trust is the ETF if you want to take exposure in Dow 30 index stocks. Dow Jones Industrial Average (DJI), also known as the Dow 30 is a price-weighted index of 30 large-cap US equities and differs slightly from some of the other top US indices as it solely includes US-based businesses. According to the S&P indices website, “a stock is added to the index only if the company has an excellent reputation, demonstrates sustained growth, and is of interest to a large number of investors.” In contrast to other indices, the Dow 30 selection is not governed by quantitative rules or market capitalization.
While the market meltdown has brought down the valuations and the prices down, a further correction may not be ruled out. But, for a long-term investor, it is futile to time the market and wait for the market correction to be over. No one can predict when the market can see a reversal. Therefore, it is better for retail investors to systemically buy ETF units on a fixed date and bump up the holdings with additional units on days when the market dips. This exercise may help investors to accumulate more units and as equities tend to drift upwards over the long term, they may stand to benefit.
Disclaimer: The investing decision in these ETFs or any other stock should be taken on your own after carefully evaluating the business and other fundamentals of the company or after consulting one’s financial advisor. It is not a recommendation to buy, hold or sell in any of the stocks. Financial Express Online does not bear any responsibility for their investment advice.
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