How to Beat the S&P 500 in Your 20s and 30s

If I were in my 20s or 30s and I wanted to beat the S&P 500 over the long run, here are three things I might consider doing.

I'm Tyler, a former financial advisor and portfolio manager. Now, I create financial content for free, so you don’t have to pay for it.

1. Invest in a Low-Cost Index Fund

I would put 70% of my money into a low-cost index fund that tracks the S&P 500. Settle down, we need to work on our core before getting to our biceps.

2. Allocate to Emerging Markets

Next, I might put 15% of my money into an emerging markets fund that tracks the economies of countries like China, India, Brazil, and South Africa. Yes, there's some additional risk, but there’s also the potential for greater long-term reward.

3. Consider Small-Cap Stocks

Lastly, I might allocate the remaining 15% into a small-cap fund. Over the last century, small-cap stocks have beaten large-cap stocks by almost 1.5% annually. However, keep in mind that this is only over the very long term, as these stocks can be highly volatile and tend to have significant downswings too.

So if we’re talking about a 10-year horizon, maybe not. And if any of this is helpful, like and follow, and I’ll keep trying to get you one step closer to where you need to be.

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