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Keep Your Retirement Investing Plan Simple - Own the S&P 500

Investing for your retirement does not have to be overly complicated. In fact adopting a very simple plan increases your chance of saving and investing enough money to build a substantial nest egg. The following plan includes just six components, each of which is easy to understand and execute.

  • Begin to save and invest at an early age. Watch your money grow through the power of compound interest.
  • Save and invest regularly. Make savings and investing a habit with dollar-cost averaging.
  • Increase the amount you save and invest as your income grows. Don't spend all of your salary increases.
  • Invest in the S&P 500, a collection of the 500 largest companies in the United States. If you believe in the U.S. economy, simply own the S&P 500 to participate in its long-term growth.
  • Own a low-fee exchange-traded fund (ETF) or index fund that tracks the S&P 500. SPDR® S&P 500® ETF (SPY) and Vanguard 500 Index Fund Investor Shares (VFINX) are excellent choices.
  • The S&P 500 includes many dividend-paying stocks so reinvest all dividends. Buy new shares via dividend reinvestment to increase the number of shares that you own.

If you prefer to concentrate on a few selected stocks, see Keep Your Retirement Investing Plan Simple - Own Premier Dividend-Paying Stocks.

Use the Target Nest Egg Calculator to determine how much you need to save for retirement.

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