Dave Ramsey Portfolio vs. 100% S&P 500 ETF (VOO, SPY) (2024)

FAQs

What ETF is better than VOO? ›

Ramsey recommends investing in four types of mutual funds: growth and income funds, growth funds, aggressive growth funds, and international funds. What is Dave Ramsey's recommended asset allocation? Ramsey recommends a 100% stock portfolio, with no allocation to bonds or other fixed-income investments.

One strategy, the T. Rowe Price Blue Chip Growth ETF (TCHP), has done just that. The active ETF has proved itself as one of the top active ETFs in 2024, outperforming the S&P 500 in 2023 and so far year-to-date (YTD). TCHP has returned 11.7% YTD per YCharts, compared to 7.4% for the S&P 500.

One of the biggest reasons Ramsey cautions investors about ETFs is that they are so easy to move in and out of. Unlike traditional mutual funds, which can only be bought or sold once per day, you can buy or sell an ETF on the open market just like an individual stock at any time the market is open.

Vanguard S&P offers a lower expense ratio (0.035%) than SPY (0.095%), which means lower costs for investors and potentially higher net returns over the long term. VOO might be the more economical choice for cost-conscious investors, especially those investing large sums or planning for long-term goals like retirement.

Investing in SPY provides investors with a diversified portfolio of large U.S. stocks, making it a popular choice for those who want to invest in the U.S. stock market. Because it tracks the S&P 500 index, the SPY is often used as a benchmark for the overall performance of U.S. stock markets.

Berkshire Hathaway

A big cash pile protects the above-average core operations of this stellar company. Warren Buffett has an incredible track record of outperforming the S&P 500.

Direxion Daily S&P 500 Bull 2X Shares. The Direxion Daily S&P 500^® Bull 2X Shares seeks daily investment results, before fees and expenses, of 200% of the performance of the S&P 500^® Index.

Why ETFs Are The Best Choice For Your Retirement Investments. You know I am a big believer that a Roth Individual Retirement Account (IRA) is the best way to save for retirement. And for my money, I think Exchange Traded Funds (ETFs) are an ideal way to invest the money in your IRA.

How does Dave Ramsey recommend to invest? ›

Ramsey recommends investing first in a tax-advantaged account like a 401(k) or 403(b) from your employer. The goal should be to allocate about 15% of your gross income toward good growth mutual funds that will help you save up enough to live your desired lifestyle in retirement.

The greatest risk for investors is market risk. If the underlying index that an ETF tracks drops in value by 30% due to unfavorable market price movements, the value of the ETF will drop as well.

VTI is a total U.S. market fund and holds more than 3,500 stocks. VTI is better diversified and benefits from small and mid-cap stocks that grow into large caps. VOO is less diversified, tracking the performance of the S&P 500 Index. VOO excludes small and mid-cap stocks.

Average Return

In the past year, QQQ returned a total of 31.70%, which is significantly higher than VOO's 26.02% return. Over the past 10 years, QQQ has had annualized average returns of 18.86% , compared to 12.88% for VOO. These numbers are adjusted for stock splits and include dividends.

In the past year, SPLG returned a total of 25.40%, which is slightly higher than VOO's 25.39% return. Over the past 10 years, SPLG has had annualized average returns of 12.63% , compared to 12.67% for VOO. These numbers are adjusted for stock splits and include dividends.