In this video we will discuss what is the S&P500 Index, what is it used for and how to invest in it.
S&P stands for Standard & Poor's which is a private company and one of the largest credit rating agencies. It is a major credit risk researcher and it is best known by its index called the S&P500 index
500 represents the number of companies in the index. The exact number is 505 due to multiple listings of some of the companies, like Facebook and Google.
These 500 companies are listed in the American stocks exchange – NYSE and or NASDAQ
The S&P500 is a market cap weighted index. Market cap = “market capitalization” and Weighted means the larger the company, the larger is its share in in the index.
What is the S&P500 used for? It is used to measure stock performance of the 500 largest companies in the US. Approx 75% of the revenue of the 500 companies are derived from the US. Therefore, the S&P500 gives some measures the overall health of the US stock market.