What exactly is the S&P 500?
The S&P 500 Index is a stock Index of 500 publicly traded companies in the United States. The stock index is created and maintained by Standard & Poor's.
All companies covered by the S&P 500 are listed on major U.S. exchanges, such as the New York Stock Exchange and Nasdaq. The S&P 500 contains more companies than the Dow, so risk is more diversified and reflects broader market changes.
Top 10 S&P 500 holdings: Apple, Microsoft, Amazon, Facebook, ExxonMobil, Johnson & Johnson, Berkshire Hathaway, JPMORGAN Chase, ALPHABET INC A, ALPHABET INC C (Parent company of Google)
Are these companies familiar? Most of them are fortune 500 companies. So by investing in the S&P 500, you're indirectly owning these great companies.
The stocks that make up the S&P 500 index are selected by a committee that changes stocks. Its stock market is so representative that it shows the ups and downs of the U.S. economy.
The S&P 500 is up 983% over the past 30 years, a compound annual gain of 7.9%. So whenever you invest in the S&P 500 and hold it for a long time, you far outperform most investors.
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