Hi is it more advisable to invest in ETF S&P 500 or bluechip now? beginner here

If beginner, S&P 500 ETF. As times grow n u r gd at it can try blue chip. As S&P 500 ETF contains a basket of stocks. Invest in basket of stocks is less volality than owning individual blue chips.

To invest in bluechips, you need to understand the fundamentals of the company. What products do they sell, which sector they are in, do their products command a wide/narrow/no economic moat. What is their revenue growth and net income growth for last five years. Also current macroeconomic condition with war in Ukraine, combined with high inflation of 9.1%, a fed funds rate of 3.25-3.5% by end 2022, China's zero covid policy, and a mortgage debt crisis building up, all these are not good for the overall markets.

​

index tracking etf will dilute some effects of sudden plunge in a particular stock, eg the ceo has a scandal, or a lawsuit was slapped on the company, an earnings miss can all cause the stock to plunge.

​

the S&P 500 is in a short term downtrend, still in a bear market although July has seen a strong rally. Whether it is a bear market rally that will fail and retest the lows, or it will be the beginning of the next bull market, nobody knows until it happens. Timing the market is impossible, so if you decide to go with ETF like Spy, consider your overall portfolio size and start with a 1/4 or 1/3 of your total position size. If it drops by X%, use dollar cost averaging to lower your position cost. The key thing is not to go all in at once, but to build the position over a long period of time. Eventually the bull market will come, but if have a long time perspective eg 5 to 7 years, it should be a net gain.

​

As for blue chips, you have to consider what stage the company is in. Are they a value stock or a growth stock? Large cap, mid cap or small cap? What is the beta, aka how volatile the stock price is. Can you stomach a drop in 80%? Or do you have a stop loss plan, exit when it drop 10-20%, or wait till it drop 40% then exit? Are you able to stomach the losses.

Before diving into the product, know what are your potential loss and if you can stomach it. For instance, if you put in 10k today and tomorrow it drops to 8k, will you panic and lose slEep?

​

that being said, both beginners and experts can hold ETFs for long term investments because it helps them diversify their risks.

​

in comparison, holding Tesla through a span of 5 years without monitoring might be considered a gamble because you won't really know what will happen in the next 5 years of a specific company (Nokia as a classic example).

SPY ETf would have a lower risk than a blue chip. So as a beginner you could start with say 80% in the SPY index and maybe 10% each to 2 bluechips you like. Then start learning how to analyze their businesses and how they grew to become a blue chip. Good luck!