I’ve been buying SPY pretty consistently for a few years and have ~20 shares right now. I’ve realized during that time that VOO is probably preferable over SPY. Should I keep stacking SPY or just start buying VOO?
As the title says, I’m considering selling my 1.5 shares of SPY and buying VOO. I know they are essentially the same, but VOO has a lower expense ratio. Is it worth it? Thanks.
How long have u held it for? Which account do u have it in? Are u ok with paying taxes on it? It's only 1.5 shares.. in the long run it won't mean much. For me personally I would because of the lower expense ratio
Just buy VOO in the future. It will only really have a difference if you plan on holding for 20+ years
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Why does Berkshire Hathaway hold both VOO and SPY in their portfolio. Is there any benefit to holding both simultaneously?
I (30yo) have a brokerage account through Robinhood and I’ve been slowly buying SPY (~25% of my portfolio) as a long-term ETF. I’ve recently come to learn that VOO may be better for “set and forget”. Would it be better to continue buying SPY or make the switch?
Think of an ETF company like any other company, they have employees and offer some good/service to the consuming public. The service is managing the ETF(s) and they charge a fee for that service to pay employees/make profit. You pay these expenses by way of reduced returns, not by paying a separate fee through your brokerage.
For example, if you bought a share of an ETF with a 1% expense ratio for $100 and the value of the fund's investments did not change at all, your share would be worth $99 at the end of a year. If the fund's investments grew 5% in a year, you'd see a 4% return on your investment due to the expense ratio.
As for "best" ETF, that's a matter of opinion/goals. A high expense ratio isn't bad if net returns are consistently beating less expensive alternatives. I suggest you start by evaluating ETF's based on what they hold (S&P 500, tech stocks, dividend stocks, etc.). Then how they weight what they hold (market-cap, equal weighting, revenue weighting, etc.). Then historical returns and expense ratios. What you'll likely find is that the most popular are popular for good reason, but you should know what/why you're buying.
When you're looking at the expense ratio of a fund, that "expense" is not from the broker but from the fund itself. Meaning if the value of the constituents of the fund rises 10% in one year but the fund has a 1% expense ratio, your net return for that fund is around 9%. The realization of those fees is not as transparent as a "1%" charge in your portfolio; the management fees are deducted on a daily basis, so the exact fee may not necessarily be 1%.
That's separate from the fees that your broker changes for transactions, which only occur when you buy or sell securities. Look at robinhood's fee schedule to see what fees they change for ETFs.
Which one is the best to pick?
Well obviously the "Best" is the one that makes the absolute highest return over your investment horizon. Unfortunately no one knows which one that will be. You can look at past performance to see what it's done in the past, or decide to invest in a particular market segment. Also remember that risk and reward are tradeoffs - the funds that have the highest potential return also tend to have high risk - meaning that they could also lose a lot. So determine what your risk tolerance is and find funds that have a similar risk level that have the best historical return (net of fees).
If you're comparing funds that track the same index, then most likely the one that has the lower fees will give you the highest net return, but no index tracker is perfect, so there may be slight variations even among ETFs that try to track the same index.
For those who invest in SP500. I found that SPYM has lower expense ratio of only 0.02%. But seems the volume is smaller. Meanwhile, VOO and IVV has expense ratio of 0.03%. Is it better to buy SPYM?
Choosing between SPY and VOO gets asked about constantly, so here’s a look at how they actually stack up when digging into some key numbers.
I created a hypothetical $10k portfolio in Dividend Watch to analyze the differences, since most brokers don't offer similar dividend/total return insights.
If you tossed $10K into each a year ago, they ended up basically the same. VOO returned about $1,895, SPY about $1,846. Annual income from dividends is also close... $134 for VOO vs $127 for SPY. Not exactly life-changing differences.
Dividends are steady in both, since they track the same S&P 500 companies. SPY’s been paying a little more per share historically, but because VOO has a lower expense ratio (0.03% vs 0.09%), it usually edges out slightly better total returns over time. Not by a lot, but over decades it adds up.
Holdings are essentially identical. Both track the S&P 500, so you’re owning the same Apple, Microsoft, Nvidia, etc. The sector weightings are virtually the same too... tech around 35%, financials ~13%, healthcare ~9%.
So the real difference? Fees, it appears. SPY’s been around longer (since the 90s), but it charges more. VOO is newer, cheaper, and has become the favorite for long-term holders who care about squeezing every last bit of performance.
At the end of the day, they’re basically interchangeable. Most people just pick VOO for the lower expense ratio, unless they’re day trading and want SPY’s liquidity.
Do you stick with one, or doesn’t matter since they move in lockstep?
So I want to invest in ETF's long term but money is tight so I know its best to invest in one but not sure which one. I'm leaning towards $SPY because its popular. What do you guys think?
$voo for long term.
Some good advice so far but as some have recommended please do your own research, never buy anything because it's popular as your original post suggested. This is not directed solely at the funds you mentioned but more in general terms for your next purchases.
The above funds are solid and popular because they are diversified themselves and carry very low risk long term.
Personally I like vanguard because of their expense ratio.
I've always preferred SPYM (formerly SPLG) for the lower cost and expense ratio. Even a 0.000001% boost in compound growth is good for me!