"There's a reason investing legend Warren Buffett has long said that for everyday savers, putting money into the S&P 500 index is a smart bet. The S&P 500 consists of the 500 largest publicly traded companies as measured by market capitalization. Put another way, when you invest in the S&P 500, you're getting a diverse mix of established businesses. So if you decide that you're only going to invest your money in an S&P 500 ETF like the Vanguard S&P 500 ETF (VOO),"
"While VOO may be great for diversification, one major drawback is that you can't use it to outperform the stock market on a whole. If that's your goal, then you may want to branch out into individual stocks. Before adding any given stock to your portfolio, though, you'll need to do your research. That means assessing each company's: Financial health, including how it manages debt Competitive edge Risks and weaknesses Management team"
The S&P 500 comprises the 500 largest publicly traded companies by market capitalization, offering investors exposure to a diverse mix of established businesses. An S&P 500 ETF such as VOO provides broad diversification and can be a reasonable sole holding. Market-cap weighting causes larger companies to have greater influence on ETF performance, which can limit the potential to outperform the overall market. Investors seeking outperformance can add individual stocks after researching financial health, competitive edge, risks, and management. Avoid overweighting names already dominant in the S&P 500, and consider mid- and small-cap ETFs to expand exposure.
Read at 24/7 Wall St.
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