« Credit Card Defaults Are Soaring | Main | Share With Us: What Are Your Goals for 2008? »
Investment Basics: What’s An “Index?”
By JLP | December 24, 2007
Ryan over at UncommonCents has written a pretty good post titled Working Backwards: What’s an Index? What’s getting confusing about indexing is the sheer number of indexes that are now available. For instance, here’s a list of some of the MANY indexes that are available:
I’m sure there are others that I haven’t thought of. If I have missed some, please leave a comment below and I’ll include them.
Which one should you use?
I would say the most-used index is the S&P 500 Index. However, that’s not to say that it is the most appropriate index to use for all portfolios. A portfolio that is invested in mostly small-cap stocks should not be compared just against the S&P 500 since it is composed mostly of larger companies.
Over the next few weeks I’ll take a more in-depth look at each of the index providers. Until then, read Ryan’s post if you are wondering what an idex is.
Topics: Index Funds, Investing |