Invest in an S&P 500 ETF. This is probably the lowest effort side project you can have which still makes money. Also, if you learn about the stock market, it makes you more confident in how your savings looks, how your retirement will look, how to manage money, etc.
Of course there is the whole "timing the market is a waste of time" discussion but I wouldn't buy REITs right now considering where interest rates are going. Though given that interest rates simply haven't increased very quickly, could be that the market is over-discounting them and they are actually underpriced!
I do this but I'm beginning to wish there were a way to exclude specific stocks from the ETF to improve performance. Basically looking for something exactly like SPY but with a way to blacklist certain stocks that I think are poor investments (e.g. Lyft). As far as I know there isn't any way to do this short of buying tons of individual stocks to create my own diversified portfolio without the stocks I want to avoid, which simply isn't worth my time given the sums I have invested and how much performance benefit I think I would get with those stocks excluded.
I have a theory that with a modicum of common sense you can probably increase your gains by 1-3% per year by avoiding stocks that are overbought by ETFs simply by virtue of their market cap or industry (meaning, the main reason these stocks hold their current valuation is that they have a lot of buy-side support from the fact that they are included in many ETFs).
Maybe a good fintech business opportunity since afaik this type of product doesn't exist!
The product you are looking for exists in the form of hedging out what you don't want in the ETF. Buy your ETF, and short the stocks you don't want in it.
ETF's are low to no rates because they don't have active management, and you are talking about active management.
With active management, you are describing the job of a hedge fund manager, and essentially wanting to create your own fund.
If I do that though then I pay a premium to open the put/short position in the form of theta and interest respectively. And since my portfolio isn't that big I would end up allocating a sizable percent of it to open short positions on all the stocks I want to exclude. So as far as I can tell, it's considerably more expensive than just not holding those stocks to begin with
What I really want is a way for a company like vanguard to let me purchase something based on an index but in the form of a weighted basket of fractional shares. That why I can keep the same allocation as SPY but hold shares that I can micromanage to "fix" any issues I have with the ETF. Theoretically that should be possible to set up for not very much money since there's no active management on behalf of the fund.
Or, you define your own ETF, maybe initially based on some existing ETF or well known index, and then you can dump arbitrary amounts of money into it - but without actually having to individually buy the shares yourself. Maybe a product like this exists already but I don't know what it's called. I would be willing to pay a higher expense ratio than normal low-cost ETFs charge to use this product, but not as high as a hedge fund (since I am the one actively managing it).
There is a new company that lets you build your own basket of up to 30 stocks or ETFs. It's not exactly what you're looking for but might be helpful. https://www.motif.com/motifs/byo
Wealth Multiplier Protip: if you're a business owner (even if your business is just a single person LLC) you can put away up to $56K a year pre-tax into your "solo" 401k.
I am put off by ETF performance thanks to my results last year. I had a SEP IRA for my business with $1,000 in it and a traditional IRA with $6,000. I bought a pharmaceutical ETF with the SEP IRA. After a year it lost about 5%. Meanwhile the trad IRA grew to $10,500 investing in companies I know.
That's because you bought an industry-specific ETF. So any imbalance in that industry would noticeably affect your holdings in the short period. General advice is to buy diversified ETFs (like the S&P 500 as the OP said) and hold them for long periods of time. It's a very different strategy from buying and selling individual stocks over a short term.
That's a problem with the specific underlying securities you bought, not a problem with ETFs in general. The "classic" ETFs are for well-known indexes, like the S&P 500.
That’s where I learned everything I know about investing. It’s definitely the ultimate source of information about passive investing. I spent a lot of time there a decade ago and now I pretty much don’t need to visit much anymore as the whole point is to “set it and forget it”
