Should You Buy the S&P 500 Equal Weight Index or Not?
Make the right choice and stick to it
Do you get confused about investing in the stock market, even if you want to stick to a simple strategy like passively buying an S&P 500 index fund? There are various factors to consider, like the equal weight index.
The S&P 500, or Standard & Poor’s 500, is an index representing the performance of 500 large companies listed on U.S. stock exchanges.
It’s considered an indicator of the U.S. economy and a benchmark for many investors. I’ve been investing in the index for years, and it’s the perfect way to get exposure to the stock market.
However, some people tend to make a simple strategy like a complex one.
That’s because there’s more than one way to invest in this index.
- The market-cap-weighted S&P 500 (which is the default for ETFs like VUSA or VOO)
- The equal weight S&P 500 (which is what some people recommend)
In this article, we’ll dive into what the S&P 500 is, how the market-cap-weighted index works, and what the equal weight index entails.
If you’re new to investing, you can also read my quick article on the four things you need to know before you invest.
