I was looking for creating a portfolio which can beat the S&P 500 as well as which can give us dividend too. Investing in S&P 500 is great for the starters but it has some limitation and once you know the basics, it's better to create a portfolio for the long term which can actually beats the S&P 500, gives better long term returns as well as which can give us dividends too.
S&P 500 invests in top 500 companies. Now in that 500 companies, the investment is based on the weight age. If the top 100 stocks have a weight of 50%, then you are investing 50% in top 100 itself and the remaining 50% goes to another 400 stocks. And thus sometimes there is a limitation in the diversification as well as returns.
Now the portfolio which I am thinking can be a good investment portfolio includes 3 types of funds.
Now using this funds, you can have top 100 companies, high paying dividend companies as well as Small Cap and Mid Cap fund having the same investment amount as the top fund because that's equally weighted and invested. In this way you are diversifying at the best possible way as well as you are also getting the good dividend.
Now the thing is this portfolio is good in all the markets. In the bull marlet top 100 gives a great returns, in bear market you get good dividends from the stable companies as well as in the sideways market you are investing in all the stocks so that once the bull market starts you get good returns from all the stocks.
In the video, I have also shared the list if ETF for every type of ETF, so do watch and let me know your thoughts.
