How to Invest in the S&P 500

How to Invest in the S&P 500

When we look at the financial markets activity that is currently seen today, there have been some interesting trends that have started to unfold.  Since the Great Recession of 2008, financial markets have started to stabilize and this has led to historic bull rallies in assets like the S&P 500.  For newer investors, it might be unclear what this stock benchmark is exactly.  So, here we will look at some of the factors that are traditionally involved when investors are ready to start investing in the S&P 500 stock market index.

S&P 500: The Basics

First, it should be clear that the S&P 500 is a collection of 500 commonly traded companies that are offered in shares on a US stock exchange.  When we look at the financial news headlines in periodicals like the New York Times or the Wall Street Journal the numbers that are quotes will essentially tell you the collective value of those 500 commonly traded stocks.  So, for example if the television news tells us that the S&P closed at 2,000 on a given day it would essentially mean that the total value of all stocks in the index would be equal to $2,000.

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This is important for those investors that are looking to buy the S&P 500 stock index as a whole.  This can be done using a few different methods.  Investors can buy stock options or stock futures as a means for speculating on the underlying value of the stock exchange.  This can be accomplished using the MT4 trading platform that is freely available from easyMarkets.  Additionally, investors can buy into exchange traded funds (ETFs) that track the total performance of the S&P 500 index.  The most common instrument for doing this would be the SPDR S&P 500 ETF (SPY), which is one of the most commonly traded assets in the financial markets.

Individual Stock Shares

Whenever you are trading in the S&P 500 it is important to remember that you are still trading the values of individual stocks.  In the general consumer space, this includes names like Exxon Mobile (XOM), Johnson & Johnson (JNJ), and General Electric (GE).  In the tech space, there are other popular names that can often influence the market.  This includes some of the best stocks in the market:  Apple, Inc. (AAPL), Microsoft (MSFT), and Facebook (FB).  

So, if you are looking to get started in investing and to learn how to profit in the financial markets one of the best options that will be available to you can be found in the asset instrument known as the S&P 500.  Significant profits can be made, but when you are dealing with the pro stock markets it is always best to conduct your proper research before getting into any major investments that could be subject to increased market volatility.  Once this is accomplished, it becomes much easier to beat the market and to secure your financial freedom for both wealth-building and retirement.  Good luck to you in your stock market trading!

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