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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 | 9 Comments »
December 24th, 2007 at 1:48 pm
Looking forward to it JLP.
December 24th, 2007 at 4:49 pm
How about FTSE? Vanguard has several funds indexed against FTSE indices and iShares has several ETFs now, as well.
December 24th, 2007 at 4:51 pm
Thanks for the link, JLP! I’m going to be covering some more basics in the next few weeks, maybe even starting tonight…
Happy holidays!
-
Ryan
http://uncommon-cents.net/
December 24th, 2007 at 4:57 pm
ste,
I thought I already had FTSE on the list. Thanks for mentioning them.
December 25th, 2007 at 5:13 pm
I really like Vanguards Total Stock Market index fund….it provides broad diversification…..also, I’m a big fan of Vanguard’s Target Retirement Index funds for my IRA….critics advised that the specific fund that corresponds to your desired retirement date tend to be too conservative, weighted with not enough % of stocks….I fixed that by owning a later target date fund, in my case Target Retirement 2045 (i plan on retiring in 20 years)….This fund is less conservatively weighted…..
December 29th, 2007 at 5:01 am
Star Money Articles for the Week of December 24
Here are some recent interesting posts from the MoneyBlogNetwork and beyond: Get Rich Slowly tells us four things kids want for Christmas. Consumerism Commentary says people fail at financial New Year’s resolutions. AllFinancialMatters tells us what a…
December 30th, 2007 at 10:29 pm
[...] JLP took us back to basics by explaining what an index is. [...]
December 30th, 2007 at 10:29 pm
[...] JLP took us back to basics by explaining what an index is. [...]
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