30% of the S&P 500 is in just 7 Companies

[00:00:00]If you invest a thousand dollars into an S&P 500 ETF, almost 300 of that is going to be invested in just [music] seven companies. The ETF is weighted by market cap, so companies with higher market capitalizations make up proportionally more of the index. So, as you can see here, Nvidia, Apple, and Microsoft, they make up 7.41%, 6.74%, and 4.62% [music] of the weighting, and so on. So, when people say they're diversified by owning the S&P 500, they're really just betting that big tech continues [music] to perform well. Now, there are equal weight ETFs, which means that of your thousand dollars invested, every stock gets the same allocation [music] of dollars. But, here's the thing, if you go with that option, over the past 10 years, the normal S&P 500 has returned 212%, while the equal weight version returned 143%.

[00:00:46]So, the concentration didn't hurt you in this time period, it just made you more money. This video isn't about you switching funds, it's more of a video to let you know what you actually own if you buy the S&P 500. If that much tech makes you nervous, you can always diversify, but these seven companies, they're not the worst companies to invest in. Just my opinion.