It's been a turbulent past couple of weeks, but the S&P 500 is poised to finish the year with some historically decent gains intact. At the time of this writing, the S&P is up just north of 14%. It's a solid return, but less so when you compare the last two years. When you zoom out to the global picture, the S&P 500's gains have been quite subpar, to say the least.
The end of a calendar year is a good time to assess your investment strategy and make sure it's working for you. And if you're in the process of building wealth for retirement, there are two things you could probably use to supercharge your portfolio - growth and regular income. Investing in ETFs, or exchange-traded funds, is a great way to build out a diversified portfolio while limiting the amount of work you have to do.
"December could bring seasonal tailwinds back to the stock market and return it to all-time highs. Historically, since 1950, it's the third-best month of the year for the Dow and S&P 500; it's also the third-best month for the Nasdaq, since 1971, according to the Stock Trader's Almanac," as noted by CNBC.
The Invesco QQQ Trust tracks the performance of the Nasdaq 100 index and gives access to the 100 largest non-financial companies on the index. QQQ gives access to the top 100 tech stocks in a single ETF. The fund is rebalanced quarterly and reconstituted annually. The Invesco QQQ Trust is a weighted capitalization ETF which means that the companies with a larger market cap have a higher weightage in the ETF.
I'm of the view that passive and active investors alike can find value in owning exchange-traded funds (ETFs). Because there are more ETFs on the market today than individual stocks, there's a fund for every kind of investor. These highly diversified investing vehicles allow investors to purchase a stake in a wide range of companies, with portfolios that are automatically rebalanced based on certain criteria.
I've long been a proponent of diversification, and investing for the long-term in a structured and coherent fashion. Up until recently, most investors looking to create diversified portfolios had to do so on their own, or with the help of an advisor. And before zero trading fees became commonplace (largely due to payment for order flow and the rise of high-speed quantitative investing companies, but that's a story for another day), it was a costly endeavor to do so.
Many Boomers in 2025 need dependable passive income, and one outstanding way to achieve this is to invest in exchange-traded funds (ETFs). Unlike open-end mutual funds, ETFs trade on major exchanges like stocks. They own financial assets, including stocks, bonds, currencies, debt, futures contracts, and commodities such as gold bars. Having more passive income can help cover rising costs, such as mortgages, insurance, taxes, and other expenses.
However, retirees and conservative investors seeking income for living expenses or just as an investment hedge may feel left out - the paltry dividends from pure stock index ETFs are negligible, yet their double digit gains are reliable portfolio asset growth factors that are essential for staying ahead of inflation. The popularity of the ultra high dividend YieldMax ETFs flipped the script and made covered call dividends themselves into a wealth building platform through dividend compounding.
CEO Larry Fink said the global market currently holds more than $4.5 trillion in digital wallets, spanning crypto, stablecoins, and tokenized assets. "A lot of that money is outside the United States," Fink said on CNBC earlier today, emphasizing the opportunity for the firm to reach new investors through digital channels. Fink said tokenization could allow investors who are entering markets through crypto to access more traditional long-term products, such as retirement funds.
VOO tracks the S&P 500, an index of 500 large-cap U.S. companies across sectors like technology, healthcare, and finance. Giants like Apple ( NASDAQ:AAPL ), Microsoft ( NASDAQ:MSFT ), and Amazon ( NASDAQ:AMZN ) dominate its holdings, reflecting the performance of America's biggest firms. VTI, on the other hand, follows the CRSP US Total Market Index, encompassing over 3,600 stocks, including large-, mid-, small-, and micro-cap companies. This broader scope captures nearly the entire U.S. stock market, offering more diversification.
It doesn't hurt to have a source of passive income in your retirement supported by your investment portfolio. Whether you are inching closer to the golden years or are already retired, an investment portfolio that generates steady income can help cover your expenses. During retirement, it is best to keep things simple and identify investments that are cost-effective. Exchange-traded funds (ETFs) can be an ideal choice if you do not want a hands-on approach to investing. ETFs invest in a bundle of stocks and track an index. You'll get to own a diversified portfolio at low cost and enjoy steady income over the years.
Dividend-oriented strategies aren't just for traditional value investors anymore. Many investors want to capture artificial intelligence (AI) growth while still generating reliable income. That can be achieved by pairing income-focused ETFs with AI-heavy funds, creating a forward-looking portfolio that balances payouts with exposure to transformative technology. Why Combine Dividends With AI? Artificial intelligence is reshaping industries from healthcare and finance to entertainment and manufacturing. Companies such as Nvidia, Microsoft, Alphabet, and AMD are leading this shift.
Beating the S&P 500 is what every investor aims to do, and doing so for a long time is a coveted achievement. Unfortunately, most hedge fund managers and retail investors have been unable to beat the benchmark. You'd often hear the advice to buy and hold a low-cost S&P 500 ETF, like the SPY, and forget about stock-picking or ETFs that track other benchmarks.
