You Can Do Better Than the S&P 500. Buy This ETF Instead
Investing isn't a one-size-fits-all situation, which is why there are so many different investment approaches you can follow. And yet the common reference point for most investors is the S 500 (SNPINDEX: ^GSPC) index. Here's one big problem for a retired investor in need of income who just defaults to the S 500: The index's dividend yield is a scant 1.3% today. It would be hard for a dividend investor to live off of that, which is why a better option would be Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD), which has a yield of nearly 3.5%.
As far as indexes go, the S&P 500 Index is fairly well constructed. For starters, it owns a large number of stocks, providing diversification. The stocks are selected based on their size and importance to the U.S. economy, so they are notable companies, not obscure businesses. The stocks in the index are weighted based on market cap, so the largest stocks have the most influence on the index's performance. That's pretty representative of the real world, and it ensures that anyone who owns the index is putting more money into the best-performing stocks (which are usually, though not always, the largest ones).
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Source Fool.com
