What is the S&P 500?

Key Points

• The S&P 500 is the preferred stock benchmark of most investment professionals for measuring broad U.S. market performance.
• An index is a group of securities that represent a subsector of the market. Indices can typically be purchased through ETFs and Mutual Funds and give performance that is indexed to the benchmark.
• The S&P 500, or just S&P measures the stock performance for the 500 largest publicly traded US companies across various industries.

Full Diversification through One Security

When it comes to investment management, almost all investors are informed on Why Portfolio Diversification Is Important in order to mitigate risk. Investing in the S&P gives you full diversification across all major industries and is predominantly composed of large cap stocks that many of you are already familiar with because of their products and services.

Conclusion

While you continue to further educate yourself on investing and slowly build confidence when it comes to picking stocks, allocating a portion of your cash into the S&P on a monthly basis is a wise first step in order to increase your personal wealth and indirectly support various companies you find interesting.

An important note to consider though, you are not able to invest directly into the S&P 500 but you can invest into a S&P 500 Index Fund that mirrors the S&P. Learn a little bit more about why GenVest calls it The Mighty S&P.