Decide what index fund/ETF

For a novice investor There are three possibilities that come to mind, and I am comfortable with:

1. S&P 500 ETF Trust. Trades on NYSE (New York Stock Exchange)under the ticker SPY

2. Total Stock Market Index Fund ETF Shares. Trades on NYSE (New York Stock Exchange) under the ticker VT

3.iShares Core S&P 500 UCITS ETF USD . Trades on the London stock exchange under the ticker CSPX.L

All take a relative low expense ratio(0.09%, 0.08% and 0.07% respectively), and have a fairly good level of liquidity

SPY and VT, pay a yearly dividend of around 2%.It looks, and it is low, compared to other type of investments, yet over the years the wonders of compound interest does it’s magic.

CSPX.L instead of paying the dividend, purchase more units of the ETF

Add to that the relatively low risk compared to other types of investment, and you can sleep well at night.

One may chose different ETF’s, one size does not fit all. As a guideline I would suggest to avoid ETF’s that have a higher expense ratio than 0.4 -0.5%

As a reference point, in the last 10 years (from 2011 to 2020):

-SPY had an average annual return of approx 11.5% without reinvesting the dividends, and approx 13.7% with dividends reinvested before tax

-VT had an average annual return of approx 6.8% without reinvesting the dividends, and approx 9.3% with dividends reinvested before tax

-CSPX.L had an average annual return of approx 13.2%(dividends reinvested automatically after tax)

he more mathematically inclined readers, calculate the result of a one time deposit of 1000$ at t year period.

Not bad at all in my books.

For the mathematically inclined reader, you can calculate the result of investing a monthly amount of 500$ or 1000$ during the period mentioned above.

Also one can see how many years it will take to achieve the first million dollars.

A few things to bear in mind:

- No matter how much you can save a month, building your future wealth is better than not doing it

- The more you save, the greater your wealth will be

-Past results ( of any type of investment) do not mean that the future results will be the same

-Depending on personal preference, one can choose to keep or reinvest the dividends.