If you’ve been watching the stock market lately, you’ve probably felt a little bit of FOMO. On June 12, SpaceX made history with the largest initial public offering (IPO) in stock market history, and the stock has already rocketed nearly 50% since its public debut.
With other tech giants like OpenAI and Anthropic expected to follow suit soon, we are looking at a brand-new wave of public megacap tech stocks.
Whether you love Elon Musk or avoid him, and whether you are eager to buy the hype or terrified of a tech bubble, here is the reality: SpaceX is likely coming to your retirement portfolio anyway.
The Index Inevitability
You don't even have to manually buy SpaceX stock to own it. Because of its massive footprint, index funds are already moving to adopt it:
Early July: SpaceX is expected to be added to exchange-traded funds like the Invesco QQQ Trust, which tracks the Nasdaq 100.
Next 12 Months: It will likely meet the criteria for inclusion in the S&P 500 and its related index funds.
Right now, SpaceX’s total market value sits at a staggering $2.8 trillion, but its "float-adjusted" market cap (the shares actually available to the public) is only around $109 billion. This means it won't completely dominate your index funds immediately. However, as investor lockup periods expire and more shares hit the market, its influence on your portfolio will grow.
What This Means For Your Money (Depending on Your Age)
Should you worry about a tech bubble popping and pulling your retirement savings down with it? The answer depends entirely on where you are in life.
1. If You Are Young: Sit Back and Relax
If you have 30 or more years until retirement, a tech correction doesn't really matter. You have plenty of time to weather market volatility, ride out a bear market, and let historical market returns (which average about 10% a year) do their heavy lifting.
2. If You Are Nearing or In Retirement: Take Cover
For those close to or already enjoying retirement, a tech-heavy index fund poses a major threat known as sequence of returns risk.
The Bitter Truth of Math: An investor who starts retirement with $1 million and loses 15% in their first two years could completely run out of money in 18 years (assuming standard inflation-adjusted withdrawals). But if those same 15% losses happen 10 years later, that same investor would still have $400,000 left after 18 years.
Hitting a bear market at the wrong time can permanently alter your lifestyle.
How to Protect Your Nest Egg
If you want the safety of index funds but are nervous about overexposure to megacap tech giants, financial advisors suggest a few tactical moves to insulate your portfolio:
Build a Cash Buffer: Keep up to two years’ worth of portfolio withdrawals in cash or cash equivalents. This ensures you won't be forced to sell off stocks at a loss during a market dip.
Create a Glide Path: Consider dialing your stock exposure down to 30% right as you enter retirement, then gradually scaling it back up to 60% over time.
Embrace True Diversification: If your money is solely in the S&P 500, you are heavily exposed to tech. You can diversify by looking into international funds, small-and-mid-cap ETFs, or value-tilted funds that keep tech exposure to a minimum.
The Bottom Line
SpaceX's historic IPO summer is thrilling to watch, but it serves as a great reminder to check the engine of your own financial vehicle. You don't have to ride the rocket directly to get caught up in its trajectory—just make sure your portfolio is built to handle the turbulence.