The SPDR (SPY) commonly known as Spyder is an ETF that tracks the S&P 500 Index. This ETF provides investment results that, before expenses, correspond to the price and yield performance of the S&P 500 Index. The S&P 500 Index is a diversified large cap U.S. index that holds companies across all eleven sectors. Clients are able to invest in this ETF on almost all trading platforms by simply purchasing shares of it.
If you are looking for a low risk investment that produces high return I would recommend investing in this stock. Looking at the historical data of this ETF it produces an average monthly return of .84% which would be an annual return of 10.08%, while having a monthly standard deviation of 4.15%. I produced 100 random outcomes of investing $500 into this stock every month for 30 years. When I did this, I got an average end investment of $1,102,087.27. However, 95% of the time your investment will be as high as $2,336,222.17 or as low as $(132,047.63). Which is a large range so you shouldn’t be intimidated of the negative return.
When looking at this investment you also have to consider the fat tail chance of having a financial crisis. November 2008 was the worst month in the ETF history having a monthly return of -16.03%. Now, if this was to happen the month before you retire or pull out your investment it could obviously have a major setback on your investment. Although the percentage of this happening is .0024% which is very small chance.
Not many people have the ability to make their own portfolio or know which stock is the next Facebook or Apple. That is why a lot of people give their money to people on wall street to make investing decisions for them. If you would like to take matters into your own hands and make a smart investment that could substantially help your retirement, I would choose this investment.
