The smartest way to invest your first $1,000, according to a wealth manager

By Kathleen Elkins

Investing is one of the most effective ways to build wealth. Some experts even say that the only way to “truly grow” your money is to put it to work.

If you have an extra $500 to $1,000 and are ready to dip your toe into the markets, “you should put your money in just one thing: the S&P 500,” certified financial planner Peter Mallouk tells CNBC Make It.

The S&P 500 index fund holds 500 of the largest companies in the U.S., from Google to Disney to ExxonMobil. It allows you to take advantage of the success of major corporations without the risks associated with buying individual stocks.

“It’s the lowest cost investment that exists,” says Mallouk, who is the president of wealth management firm Creative Planning. “You can buy it at a discount custodian, like a TD Ameritrade, Fidelity or Charles Schwab, where the trading fees are exceptionally low. And with those 500 stocks, you now own about 80% of the market capitalization of the entire United States.” In other words, an S&P 500 fund covers about 80% of the U.S. stock market, so it’s an easy and affordable way for investors to capture core U.S. stock market performance.

Plus, “you have global exposure,” Mallouk says, “because these companies get a lot of their earnings overseas: McDonald’s has shops in China, and Walmart has locations in Europe. So you wind up with a low cost, diversified portfolio that’s invested in the global economy.”

Chairman and CEO of Berkshire Hathaway Warren Buffett agrees with Mallouk’s recommendation.

“It has been a tough time to beat the S&P,” he told CNBC earlier this year, adding: “I think it’s the best investment — because most people don’t know how to pick stocks. And, most of the time I don’t know how to pick stocks.”

Mark Cuban also champions index funds: In a 2017 interview with Hayman Capital Management founder Kyle Bass, the business titan saidthat if you don’t know much about markets, the best way to invest your money is to put it in a cheap S&P 500 fund.

At the end of the day, an extra $1,000, if managed correctly, can go a long way, Mallouk says: “If you put $1,000 in the S&P a little over 10 years ago, today, you’d have more than $3,000. Even if we go back before the 2008 crisis — if we go back 11 years — still, you’d have more than tripled your money.”

This article first appeared on CNBC  https://www.cnbc.com/2019/06/03/wealth-manager-invest-your-money-in-the-sp-500.html and is republished with its permission.

Related Content

Global Finance names Ecobank Most Innovative Bank in Africa

Download logoGlobal Finance has named Ecobank (www.Ecobank.com) as the most innovative bank in Africa. The announcement was made at the eighth Global Finance annual awards, the Innovators 2020, honoring entities that regularly identify new paths and design new tools in finance. Categories in the award include Top Innovations in Corporate Finance, Payments, Trade Finance, Cash Management, Islamic Finance, with Winners selected from different regions of the world. The classes of award compris

New research points toward an investment in VERY YOUNG entrepreneurs to unlock peer-to-peer driven employment growth

Investments in supporting successful transitions from school and university directly to entrepreneurship could unlock significant employment gains in Africa, this is according to a new research paper from the Anzisha Prize (www.AnzishaPrize.org) which has worked with very young African entrepreneurs for over a decade. To produce the report, the Anzisha Prize commissioned in-depth desk top reviews and new field research from leading academics as well as held workshops with key stakeholders across

How Africa can corner a tenth of the world battery metals market – if being brave favours Fortune!

“I can say, do we have a good business: yes. Are we in distress? No. We have a lot of work to do things are going to get worse before they get better.”

Huawei Enterprise hosts online Summit aimed at presenting how the digital transformation can lead the financial services sector out of COVID-19

Download logoHuawei Enterprise Business Group (EBG) (https://e.huawei.com/) will host the Huawei Southern Africa FSI Summit online 2020 (https://bit.ly/2XwKFL0) on May 29th, from 10.00am - 12.00pm, with the theme of “Accelerating Digital Transformation, Enable Business Growth Again”. The online summit will include presentations from Chen Lei, President of Huawei Southern Africa Region, and Chen Kun Te, Huawei Chief Digital Transformation Officer. Speaking on Huawei’ experien

Subscribe to our newsletter

Sign up for free newsletters and get more CNBC AFRICA delivered to your inbox

More from CNBC Africa

Quite frankly, be candid… What African mining bosses and the minister call each other behind closed doors

For years it has been daggers drawn between government and mine owners in disputes over mining regulations that the latter fear are driving away investors from starting new mines.

Droppa CEO on adapting and innovating to the harsh realities of COVID-19

Covid-19 has left many businesses with the stark reality of closing down or adapting. One company that is doing the latter is Droppa. Its CEO Khathu Mufamadi joins CNBC Africa for more.

The harsh taste of COVID-19 on Famous Brands

Famous Brands, the owner of several of South Africa’s best loved restaurant chains has scrapped its dividend for the second half of its financial year to preserve its balance sheet. The owner of Steers and Tashas warned that the COVID-19 pandemic has had a significant negative impact on the group. Famous Brands CEO, Darren Hele joins CNBC Africa for more.

African Bank CEO on how the bank is cushioning its customers from the effects of COVID-19

The Covid-19 lock-down has put pressure on individuals and businesses’ finances like never before. But what can be done to ease the pressure? Basani Maluleke, CEO, African Bank joins CNBC Africa for more.

Trending Now

Elon Musk and SpaceX try to make history, plus everything else you missed: CNBC After Hours

CNBC.com’s MacKenzie Sigalos brings you the day’s top business news headlines, and what to watch as the coronavirus pandemic continues to keep most of America on lockdown. On today’s show, CNBC’s Michael Sheetz explains what’s at stake in t

South Africa downgrades lockdown rules, sending 8 million back to work

Key Points South Africa to downgrade lockdown measures to level three on June 1. This means a full reopening...

Is SA’s mining industry too deep in the COVID-19 crisis?

The Covid-19 pandemic has far-reaching economic ramifications on the productivity and profits of many industries without the exception of the mining industry. For more than a century mining was a flourishing industry in South Africa. In 2019 it contributed close to R361 billion or 8.1 per cent to SA’s GDP and over R91 billion to fixed investment. It employed 454,861 people and paid R24.3 billion in taxes. Since early March, the mining industry’s average share price has dropped 10 per cent and individual companies have lost 30 to 50 per cent of their market value. Is mining too deep in the Covid-19 crisis? How can the mining industry pave the way to total recovery and become the sunrise industry it wants to be?...

How Richard Branson Is Trying To Save His Virgin Empire

Sir Richard Branson has cut a figure as a brash and rebellious impresario who took on big businesses with his larger-than-life personality, charm, and sheer guts. The Virgin Atlantic airline Branson started and grew from an industry underdog to a maj
- Advertisement -