American Stocks - What is the S&P 500 and why is it important
Whether you are a smart investor or new to the world of investing and looking to get your feet wet, you should familiarise yourself with the S&P 500. This is a US-based index that tracks the performance of US top 500 stocks and is one of the largest indexes in the world.
It comes as no surprise, that the top 10 of the 500 are popular companies such as Apple, Google, Tesla and Facebook just to name a few. The reason why this is so critical to Australian Investors is because Australia, and generally the world is influenced by the largest economy in the world, which is still the US. A lot of clients will tell me that they think stocks are too risky and that they don’t invest in the stock market. But regardless of whether believe you are invested or not, in reality, you are, and have probably been for a very long time.
What most Australians don’t understand is that through your super fund there is a complex mixture of investments that trend all around the world, not just domestically. We are talking about North America, Asia and Europe, which can be at times a good thing. As global investments can provide greater transparency, diversity and investment options.
Take the S&P500 for example (US shares) have generated a return of over 14% return for 10 years, which essentially makes it one of the best returns in that period of time. So, if you invested $100,000 in US shares, you would receive $14,000 pa in returns, over 10 years. Now give me a term deposit or cash rate that compares to that.
For those who would like to know more about diversifying their investments and investing in US stocks. Please feel free to chat with one of our financial advisors who service the Yarraville, Seddon, Williamstown and Altona areas.
