ETFs like VOO and mutual funds like FXAIX provide investors instant diversification by pooling funds to invest in a wide range of stocks, specifically those in the S&P 500.
While both VOO and FXAIX offer similar investment outcomes tracking the S&P 500, VOO provides more trading flexibility, while FXAIX excels in cost-efficiency and tax-friendliness.
Investors must evaluate their priorities: VOO is ideal for those valuing trading flexibility, whereas FXAIX is better for those prioritizing cost-effectiveness.
VOO tracks the S&P 500 by holding stocks in proportion to their market cap, constantly adjusting as companies are added or removed from the index.
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