Investing in the S&P 500 alone is not the silver bullet
This strategy by itself may not be enough, even with recent strong returns. Rather than concentrate on the stocks of a single country, a more prudent path is to consider a diversified global equities index
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IN RECENT years, I hear more and more investors say that all they need is to invest in an exchange traded fund or index fund that tracks the S&P 500 index to get the investment returns they need. In this article, I hope to dispel this myth.
Using the S&P 500 as well as the more diversified MSCI All Country World Index (ACWI), which includes developed markets outside the US as well as emerging markets, I looked at the cumulative returns for each of the 10-year investment periods based on monthly intervals between Jan 1999 to Dec 2023.
As reflected in the accompanying graphic, there were 181 of 10-year periods over the 25 years. This means that if an investor has a 10-year investment horizon, between Jan 1999 to Dec 2023, on a monthly basis, there were 181 possible 10-year periods where investors could have been invested in.
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