"Saving money for retirement isn't enough. Sure, it's a stepping stone to success. But to accumulate a respectable amount of money for retirement, you need to do more than just keep building cash. You should plan to invest your money so it's able to grow over time. Remember, inflation is apt to erode the value of money over time. So you need to invest your retirement savings in a manner that can outpace it."
"Although Buffett himself is clearly a stock-picking genius, he feels that everyday investors can do quite well putting their money into an S&P 500 ETF like the Vanguard S&P 500 ETF (VOO). By holding shares of an ETF like VOO, you're getting the benefit of diversification, since you're putting your money into the roughly 500 largest publicly traded companies by market capitalization."
"One big benefit of VOO and similar ETFs is that you're getting an easy way to invest without huge fees. And you're also making your life easier by not having to research a whole bunch of different stocks individually. The S&P 500 index covers a range of industries, from tech to financials to healthcare to retail. And because it focuses on large companies, it limits your risk profile to some degree."
Saving money alone will not preserve retirement purchasing power; investments are necessary for growth. Inflation erodes money value over time, so retirement savings must be invested to outpace inflation. The stock market offers that potential. One efficient option is an S&P 500 ETF such as the Vanguard S&P 500 ETF (VOO). An S&P 500 ETF provides diversification across roughly 500 large-cap companies spanning tech, financials, healthcare, and retail, limits risk through large-company focus, and typically charges low fees. Warren Buffett endorses allocating the majority of a retirement portfolio to an S&P 500 ETF for long-term success.
Read at 24/7 Wall St.
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