The S&P 500 Index
Undoubtedly one of the most popular ways to invest is an S&P 500 index fund or ETF. It’s cheap, easy, and every year in recent memory, the S&P 500 has been one of the best places to invest. 2019 is no exception, up almost 20% through the second quarter the S&P 500 is in position to provide investors great returns once again. With all the hype, it may seem very tempting to invest your savings in the S&P 500, but should you put all your money there?
Diversification Can Feel Disappointing
The S&P 500 is only one asset class, representing large-cap US stocks. Despite favorable recent returns, investing all your money in the S&P 500 can expose you to unnecessary risk. A better strategy is to diversify. A well-diversified portfolio is designed to help you achieve your long-term goals as well as limit your portfolio’s downs (and ups). But it doesn’t always feel good. By spreading your savings across stocks (US stocks – Small, Mid, and Large-cap, International Stocks – Developed and Emerging) bonds and cash, you may get upset when you inevitably lose money during certain periods (though your loss is likely less than that of the S&P 500 Index). You may also be disappointed during up markets when you see how well the S&P 500 Index performed, and you didn’t do as well. The good news: a diversified portfolio may produce a better outcome for you in the long-term.
At Shine Wealth Partners, we create tailored financial plans which include a diversified investment strategy. Call us today to get the conversation started around your situation.
Source: Morningstar as of 12/31/18. Past performance does not guarantee or indicate future results. Diversified Portfolio is represented by 40% S&P 500 Index, 15% MSCI EAFE Index, 5% Russell 2000 Index. 30% Bloomberg Barclays U.S. Aggregate Bond Index, and 10% Bloomberg Barclays U.S. Corporate High Yield Index. Index performance is for illustrative purposes only. You cannot invest directly in the index. Diversification does not guarantee a profit or protect against a loss in a declining market.
This material is prepared by BlackRock and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of 12/31/18, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers,
employees or agents. This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.
Prepared by BlackRock Investments, LLC, member FINRA. This material is provided for educational purposes only. BlackRock is not affiliated with any third party distributing this material.
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