How much is the entire S&P 500 worth? Hundreds of billions a year in dividends. Why is the most valuable company in the world at the tail of the index?

Dow Jones Index

Unlike the S&P, the Dow Jones Index is weighted based on stock price. Because of this, extremely interesting moments are observed.

For example, the most expensive company in the index, Apple (with a capitalization of $2 trillion), has a weight of 2.67%. And it ranks only 20th (out of 30 companies).

The top three from the Dow index are also present in the S&P 500. But there, by weight, these companies are only in the second ten.

At the same time, the weight of companies in Dow Jones is distributed more evenly. Without obvious biases into a handful of companies (like the S&P500 and Nasdaq 100).

• The share of companies in the DOW index varies from 6-7 to 1-2%.
• TOP 5 accounts for 30% of the weight;
• TOP 10 occupies 53%.

How to invest more profitably in the S&P 500: comparison of methods

For Russians, there are several ways to invest money in the American S&P 500 index: buying an ETF (BPIF) on the Moscow Exchange, buying an ETF through an American broker (IB), or buying all the shares that make up this index on the St. Petersburg Exchange. Let's look at each method and do the math.

For analysis, I took the following situation: an investor invests 10 million rubles in the S&P 500. for 30 years.

Why such a significant amount - so that the fixed costs are not too high in relation to the investment amount, and the comparison turns out to be more indicative.

The investor will sell assets from the portfolio only in retirement, after 30 years, so we do not take into account tax benefits when selling: it is not yet known whether the benefits will remain for such a long period. The investor will do rebalancing only through new contributions (he will buy what has fallen in price); he will not sell anything, so we do not take into account tax benefits for rebalancing operations within funds.

The annual dividend amount for the S&P 500 portfolio will be 1.5% of its value.

1st method. Buying ETF (BPIF) on Moscow Exchange

Let's consider ETF from Finex - FXUS, commission - 0.9% per year, and Sberbank BPIF - SBSP, commission - 1% per year.

As we can see, the costs turned out to be high. The lion's share is consumed by the ETF commission: as much as 100 thousand rubles. per year, and this amount will increase along with the cost of the account.

It is not clear why they charge 1% if the entire function of the management company is only to purchase shares according to the list in the shares provided for by the S&P 500 index. The management company does not make any efforts to improve the investor’s profitability; this is a passive investment, which means the commission should be an order of magnitude less, for example, 0.1%.

Imagine that 2 investors invested 10 million rubles. for 30 years in the S&P 500: one in a Russian ETF (BPIF) with a commission of 1%, and the other in an American ETF from Vanguard with a commission of 0.07%. The first one would have lost 10 million rubles on commission. more than the second one! Think about this figure: are you willing to pay a commission equal to the original amount invested for a passive index portfolio?!

By the way, you can calculate your commission expenses using a calculator, a link to which was kindly provided by one author on the smartlab (Finindie).

In addition, a large share of expenses (45,000 rubles) will be a 30% tax in the United States, which the Russian management company will have to pay when receiving dividends.

Conclusion: in my opinion, this investment method is NOT suitable for investing large sums of money and/or long-term investments (10-30 years), since the expenses of a passive investor are too high and not economically justified.

This method can only be used as an intermediate method, for the initial accumulation of small amounts over 5 years, with subsequent transfer of the account to investment methods that are cheaper in terms of fees.

2nd method. Buying ETFs through an American broker (Interactive Brokers)

For investing, I chose an ETF from Vanguard, which does not distribute dividends among shareholders, but accumulates them, thus we avoid paying taxes on dividends. This fund is the S&P 500 UCITS ETF (USD) Accumulating (VUAA), traded in London, fee 0.07%.

As we can see, the investor’s expenses are several times lower, and a significant part of them is one-time: for currency transfer.

You may have to prepare tax documents every year, but this will not be very difficult due to the absence of transactions for the purchase and sale of securities in subsequent years, and the lack of receipt of dividends into the account.

Bottom line: This is a good way to invest and is suitable for a long-term strategy, including investing large sums in the S&P 500.

3rd method. Purchase of all shares included in the S&P 500 on the St. Petersburg Exchange

The benefit here is obvious and fundamental: we do not pay any annual commissions to the management company.

But this method is more labor-intensive in that you not only need to buy 500 different types of shares, but also independently monitor the shares of companies in the index and rebalance your portfolio if these shares or the composition of the index change. Automation of calculations already exists; you don’t need to count manually with a calculator, but you still have to devote time.

You will also have to work hard to declare all the dividends received and fill out a bunch of papers.

As we can see, the main share of expenses is occupied by dividend tax (13%) and tax declaration. The remaining expenses are one-time expenses.

Conclusion: This is a good way to invest with low expenses, but quite labor-intensive. Personally, this method frightens me about the number of calculations and papers for the tax office to declare dividends. But maybe that's because I haven't done it before and it's not that scary.

Summary table for comparison

General conclusions:

1. Investing in the S&P 500 by purchasing an ETF (BPIF) on the Moscow Exchange is too expensive if you plan to invest large sums or invest long-term (10-30 years). The reason is that the management commission for these funds is too high. This method can only be used as an intermediate method, for the initial accumulation of small amounts over 5 years, with subsequent transfer of the account to investment methods that are cheaper in terms of fees.
2. To invest money in the S&P 500, it is better for an investor to choose any of the two remaining methods: purchasing ETFs from the world's leading management companies (Vanguard, Blackrock, etc.) through an American broker (Interactive Brokers) or purchasing all shares included in the S&P 500 on St. Petersburg stock exchange
3. The latter method is more labor-intensive when declaring to the tax office, but you do not need to pay an annual commission to the management company for managing the fund.
4. I'm currently leaning towards investing through Interactive Brokers.

Blog.

Is it possible to trade the S&P 500 index using automated advisors?

All trading advisors offered on the Internet will not bring you profit. Each of these “robots” is designed to work according to a specific algorithm for a bullish or bearish trend or for a flat. While the impulse or flat continues, the advisor earns money, but when the trend changes, both the profit and the deposit are lost.

For this reason alone, forex or stock market “trading robots” are being sold. Do the math for yourself - if “robots” brought in 200% profit per month, then why didn’t their creators become richer than Deripaska, Abramovich and other billionaires? What will the creator of the advisor answer you to this question - “no time to trade” (?), “I like the development of “robots” (??).

SNP-500 – reviews and review of scammers? Or a website for a trader?

SNP-500 cannot be called new scammers. The management of this platform has already been repeatedly caught deceiving its users. This platform was no exception; the deceivers only changed the name of the broker and hoped to rob several dozen more naive clients.

I would like to point out right away that this broker is a fake. Every open trade is fake. Every trader is being fooled; scammers try to cheat for as large sums as possible.

SNP-500 should never be trusted with your money. As was said earlier, the scammers remain the same, the scam scheme remains the same, only the name and wrapper have changed. There is simply no point in replenishing a deposit at a broker; investments will go into the pockets of deceivers. Fraudsters may start calling your phone, introducing themselves with fictitious names and forcing you to replenish your deposit with a tidy sum. But don’t forget, SNP-500 does not withdraw money, and all the reviews on the site are lies.

SNP-500 money scam, deception!

Fraudsters already have extensive experience in scams, so they will always find a way to deceive the user. SNP-500 has nothing to do with trading on the financial market. The only task of a broker is to deceive traders. So it is not recommended to trust them with your capital.

The method of deception is more than classic. A new trader is looking for a broker, stumbles upon their website and sees so many positive reviews. Naturally, each of the comments was either manually written by the administration or was purchased for money. A standard move to instill trust in a potential client. As a result, the trader falls for all this, replenishes the deposit, and his account is simply blocked or the money is not withdrawn when sending a transaction request.

SNP-500 – broker reviews

On the Internet you can find several similar brokers, about 3 of them, whose management is the same people as SNP-500. Traders are promised high income at the same time

trading in the financial market, pleasant terms of cooperation, fast payments and everything like that. But you shouldn’t believe a single word they say, because at the helm of the broker there are swindlers who are ready to do anything to deceive you.

Fraudsters will always find a reason not to withdraw money: the account can be blocked, or the deposit will be quickly lost, and the withdrawal of money will be constantly rejected due to fictitious reasons.

The office operates completely anonymously. Lack of contact information, so the broker's management is always in the shadows. I think there is no need to explain that a reliable company will not hide information about itself.

You don't even need to worry about a license. They do not have legal documentation that allows them to engage in this type of activity.

Sometimes scammers practice this scam: a trader puts a small amount of money on deposit. For the first month, he is given a taste of profit and may even be allowed to withdraw a small amount. Then they call you, force you to top up your balance with a lot of money and simply drain your deposit or block your account. Naturally, technical support will not respond, so it will not be possible to understand the reasons for the blocking.

The project is still very young. There are almost no reviews online yet. But everything is clear without them!

Conclusion

SNP-500 is another scam broker that deceives. They have neither a license nor a user agreement. The office operates completely anonymously. Under no circumstances should you trust SNP-500 with money.

Learn more about binary options trading and Forex trading.

There is an exit!

Strategies for making a profit on SP futures (S&P 500 index)

Among Wall Street investors, the most popular indicator is the 200-day simple moving average - anything above it we buy, anything below it we sell. What this can lead to is clearly demonstrated by George Soros, who, in anticipation of the next economic crisis in the US market alone, over the course of several months in 2021. lost about $1 billion:

Fig.5. Deals of D. Soros in anticipation of a new economic crisis

Masterforex-V provides several different trading systems with MF know-how:

— Scalping (Scalping: classics and strategies Masterforex-V) — for trading on time frames m1 and m5;

— Swing trading (Swing trading: classics and know-how Masterforex-V) — for trading on time frames on m30 — n4;

— “3 Elder screens” (three Elder screens: essence, criticism and modifications of Masterforex-V) — for a comprehensive market analysis;

Masterforex-V offers several tactics for trading S&P500 index futures

The main tactics for obtaining profit are based on the axiom that the index grows from crisis to crisis, i.e. The index has been bullish for about 10 years. Thus,

— buy from each rollback to Masterforex-V levels;

- in case of an error - once again open a transaction lower (the main thing is not to become like the adventures of Anti-Martingales and Martingales;

- do not set a stop loss - a bullish long-term trend will pull out all your erroneous trades, of course, if you follow the following rule...;

— full compliance with MasterForex-V money management;

Look at Soros's transactions above - everyone who bought when he sold earned a little more than 10% per annum.