From Dynamic Dinnerware to Enticing Entrées
Now you’ve got your ceramic plate as the base. You’ve got the proper utensils to help you through the meal. You’re standing in the dining hall, and now the question is simple: what do you actually get? Do you opt for the classic comfort of homemade lasagna, or perhaps a bowl of stir fry, which is fresh, vibrant, and loaded with protein for fast growth? It all depends on your nutritional goals and appetite, just like your investing palate.
Last week, in From the Buffet to Dynamic Dinnerware, we discussed account types and which brokerage is worth your attention. This week, we’re expanding your palate and moving beyond just the S&P 500. As steady, reliable, and diversified as it is, there’s more to enjoy at this buffet.
The Balanced Entrée
As you already know from From Café Lattes to Dining Hall Buffets, the S&P 500 is America’s 500 largest and most profitable companies wrapped into one index. It’s the ultimate long-term benchmark, diversified across sectors, and a reflection of the overall U.S. economy.
The easiest way to buy into all 500 companies is through an Exchange Traded Fund (ETF), which handles the allocations for you.
Three standouts:
SPY: The original ETF, launched in 1993 by State Street Global Advisors. Expense ratio of 0.09% (the fund charges approximately $9 for every $10,000 invested annually, and you never pay the fee out of pocket; instead, it automatically subtracts from the fund’s earnings.) It is extremely easy to buy and sell, with 75 million shares swapping hands daily, and it holds $650 billion in assets. The go-to fund for short-term traders, but not the most cost-effective option for long-term investors.
VOO: Vanguard’s S&P 500 fund, designed for long-term holders. Its expense ratio is roughly one-third of SPY’s, and with $1.4 trillion in assets, it’s actually the largest S&P 500 ETF.
SPLG: My personal pick. Also from State Street, but with a rock-bottom expense ratio of 0.02%. It trades about a tenth as many shares daily as SPY, but who cares if you’re holding for decades? That cost reduction adds up to more money in your pocket.
The High Protein Stir Fry
The Nasdaq 100 is the buffet’s “high-energy, high-protein” dish. Launched in 1985, it comprises only 100 companies, excluding financials, and leans heavily on technology, consumer discretionary, and communications sectors.
The top five companies—Apple, Microsoft, Amazon, Nvidia, and Alphabet—make up a significant portion of the index. Approximately 50% consists of pure tech, along with an additional 15% in communications companies, which includes companies such as Meta and Netflix.
It’s far more volatile than the S&P 500 but also more rewarding. Since 1985, it has averaged 13 percent annual returns, with painful declines of 80 percent during the dot-com bust in 2000 and 40 percent during the 2008 recession. If you’ve got decades ahead of you, those drawdowns are survivable, and the long-term growth can be extraordinary.
Using the same 25-500 Plan math, investing $25 a week from the first year of college to retirement could accumulate over $4 million from just $65,000 contributed. That’s the magic of higher-octane compounding.
ETFs: QQQ (the original and more liquid) or QQQM (cheaper for long-term holders with a 0.15% expense ratio).
The Classic Homemade Lasagna
The Dow Jones Industrial Average was created in 1896 by Charles Dow. It’s the third primary American index and includes only 30 companies. Think Coca-Cola, McDonald’s, Walmart, Goldman Sachs—plus a couple of modern tech giants like Apple and Microsoft.
The mix leans conservative, with approximately 20% financials, 20% industrials, and 25% consumer staples. It’s price-weighted (so a $400 stock like UnitedHealth has more influence than a $60 stock, even if their actual market values differ).
Historically, the Dow has returned approximately 6% annually since its inception, with a slightly higher rate of around 9% over the past half-century. During the COVID-19 pandemic, it fell 35%, a less extreme decline than the Nasdaq’s crash. Earning a spot in the Dow is considered a corporate “stamp of approval.”
And the returns? Using our same 25-500 plan, a $65,000 investment would grow to approximately $500,000 by retirement. Not explosive, but steady, precisely what you’d expect from a comfortable casserole.
ETF: DIA (0.16% expense ratio)
The Menu in Review
The S&P 500 is your balanced entrée. The Nasdaq 100 is your high-volatility, high-reward dish. The Dow is a classic comfort food. Together, they’re the menu options of the American economic buffet—from Procter & Gamble toothpaste to Nvidia’s AI chips and everything in between.
Picking dishes is only the start. Next week, we stop choosing entrées and finally taste the secret sauce of compounding that makes the whole meal work, and how being rich in time can make you a millionaire in dollars.
