Bold Advice for Investors from Suze Orman

Suze Orman's Investment Strategy

Some investors panic when they realize that only a portion of their portfolio is carrying the heavy load. However, Suze Orman approaches this situation from a different perspective.

In the latest episode of the "Suze Orman's Women & Money" podcast, Orman and her partner KT read a letter from a listener named Rachel. Rachel was dealing with concerns about diversity, rather than issues of overspending or debt.

Rachel said, "I love VOO as much as Suze, but I’m worried that the current top 10 stocks make up 38% of it." The Vanguard S&P 500 ETF (NYSE: VOO) is a low-cost index fund that tracks the 500 largest public companies in the U.S., offering simplicity and stable growth for long-term investors. However, recently, this '500' number has started to look much smaller; giants in technology and artificial intelligence like Apple, Microsoft, and Nvidia are taking a growing share within the index.

KT paused for a moment and chuckled while reading the letter. "Apparently, I’m buying 10 of the S&P 500," he said. Orman did not deny this situation, responding, "Yes, that's why I love VOO." She then explained that today’s stock market does not operate like it did years ago. "The top 10 stocks now make up 38% of the market," she noted. At this point, she expressed that even if investors prefer SPDR funds or broader options, they will ultimately hold the same big brands.

While many financial experts recommend spreading money evenly across sectors, Orman takes a completely different approach. "It's great to own VOO, but I also recommend focusing more on those big stocks and buying more of them individually," she said. She emphasized that investors need to accurately identify where the growth is, stating, "When there is no proper diversification in the right sectors, we can leave a lot of money on the table in such markets."

She mentioned that she has personally made this shift. "I switched from the Vanguard Total Stock Market Index (VTI) to VOO because I wanted to focus more on those top 10 stocks," she said. Finally, KT highlighted that spreading too thinly in innovative markets could lead to losses. And, urging to "explain the meaning of VOO," he aimed to raise awareness among listeners. Suze replied, "It’s just the Vanguard Standard and Poor's 500 ETF; it's that simple," conveying that her advice is straightforward yet bold.