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What is the S&P 500?
It is a stock market index that tracks the market capitalization of 500 leading public U.S. companies. The S&P 500 weighs its 500 components based on the market capitalization of each. The S&P 500 is maintained by S&P Dow Jones Indices, which is a division of S&P Global.
The 500 companies in the S&P 500 are chosen by a committee, called the U.S. Index Committee; the Committee is made up of full-time employees of S&P Dow Jones Indices. When considering the eligibility of a new addition to the S&P 500, the Committee assesses a company's merit using eight primary criteria: market capitalization, liquidity, domicile, public float, Global Industry Classification Standard and representation of the industries in the economy of the United States, financial viability, length of time publicly traded, and stock exchange.
Now, tomorrow, and the next day. More realistically, this month, next month, and every month thereafter. We’re talking about the concept of dollar cost averaging.
What is Dollar Cost Averaging?
It is a strategy by which you invest small amounts of money on frequent, regular intervals rather than a larger amount of money far less frequently or even all at once. If there is an opposite of dollar cost averaging, it would be trying to “time the market.”
The best time to buy the S&P 500 in many years was on March 23, 2020, when it closed at 2,237.40. About 17 months later, the S&P 500 was up nearly 99% (closing, for example, at 4,460.83 on August 13, 2021). But how many people do you know with the psychological fortitude and economic means to buy stocks during those early days of COVID?
Why the S&P 500?
If one has a small amount of money to invest for the long term, investing in the S&P 500 can be a good way to go because its components are relatively low risk and well diversified. It is also easy to do without any experience. However, there are better ways to invest.
What are the Better Ways to Invest?
Slowly and conservatively. And with a little self-education.
Look, learning the basics of investing is not difficult. The most difficult part of it, in fact, is picking your figurative teacher and classroom. Wikipedia is good for learning about hobbies and interests, but there is a reason why Wikipedia itself states that it is not a reliable source for citations elsewhere on Wikipedia and, more generally, is not considered a credible or authoritative source. The problem with many other information sources is that they are written, produced, published, and/or paid for by companies and people who want to sell you investment products and advice or are paid for .
Financial Poise is independent. It does not accept payment from any investment advisor or seller of any investment product.