When it comes to investing, there are many options available to the average investor, but one of the most popular is investing in the S&P 500 index fund. The S&P 500 only includes the best of the best, so the stocks you're investing in are far more likely to be of higher quality and more stable than those found in other indexes. That said, patient investor can buy either index fund with confidence because both indexes (i.e., the S&P 500 and the Nasdaq Composite) have proven to be reliable and have provided returns over time.
In 1926, the Composite Stock Index was created to measure market trends. The S&P 500 Index was created in 1957 and is a collection of 500 of the largest U.S. publicly traded companies. It is one of the most widely used benchmarks for measuring the performance of the Stock market. For example, when investor say the "market is up" they are usually referring to the S&P 500. Alternatively, an S&P 500 index fund is a great option for investor looking to diversify their portfolio without having to pick individual stocks.
Legendary Stock picker Warren Buffett has said several times that the best investment most people can make is a low-cost S&P 500 index fund. He'd probably recommend investing in a low-cost S&P 500 index fund. In fact, that's exactly how his will instructs that most of the money he's leaving behind should be invested.
But investor are spoiled for choice when it comes to S&P 500 index funds, so it can take some work to figure out which one is the best one for you. For example, Vanguard 500 Index Fund ETF (AMEX:VOO) invests in the S&P 500 Index, which represents 500 of the biggest companies in the US. The fund is designed to capture the performance of the S&P 500 Index, which is used to measure the performance of the largest 500 U.S. companies.
The S&P 500 Index is a primary Stock market benchmark for the broader U.S. Stock market. investor use funds that track the index to gain exposure to the U.S. Stock market. Hedge funds also use S&P 500 index funds to assess the hedge fund sentiment around these equities.
At Fidelity, it's the S&P 500 Index Fund (FXIAX). But of the two, which fund should you choose for your portfolio? The choice isn't an easy one, but investor should consider factors such as cost, performance, and risk before making a decision.
When choosing an S&P 500 index fund, investor should also consider the fund's expense ratio. An expense ratio is the amount that a fund charges for managing its investment. Generally, the lower the expense ratio, the better for investor because it means more of their money is going towards the actual investment, rather than being taken out as a fee.
In addition to cost, investor should also look at the performance of the fund over time. The S&P 500 has been a reliable investment for decades, so investor should look for funds that have been able to consistently outperform the index.
Finally, investor should also consider the risk associated with the fund. The S&P 500 is a relatively safe investment, but the risk can vary depending on the fund. investor should look for funds that have a low volatility and are diversified across different sectors.
