Any way you slice it, indexes sum up market
Motley Fool
Q: What other major stock indexes are there, other than the Dow and the S&P 500? — B.B., Midland, Michigan
A: There are a bunch of major U.S. indexes. The Dow Jones Industrial Average is the most famous, but it contains only 30 companies, including American Express, Apple, Chevron, Home Depot, Mcdonald’s, Microsoft and Pfizer.
The Standard & Poor’s 500 features 500 large U.S. companies, and its components account for about 80% of the total market value of the U.S. stock market. The Dow and the S&P 500 are often viewed as proxies for the overall U.S. economy.
Other major indexes include the Wilshire 5000 Total Market Index, which includes almost every publicly traded U.S. company. The Russell 3000 Index includes close to 3,000 of the largest U.S. companies based on market capitalization (current share price multiplied by number of shares outstanding). The Russell 2000 is a small-cap company index, made up of about 2,000 of the smaller companies in the Russell 3000.
Looking beyond the U.S., the Vanguard Total International Stock index represents almost all of the world stock market. There are many other indexes, broad and narrow, with some covering international regions.
Fool’s school: Waiting will cost you
Procrastination is a common habit, but if you engage in it with your finances, you could leave a lot of money on the table and jeopardize your future financial security.
Consider this example: Let’s say that you aim to retire at age 65 and you start saving and investing money for retirement at age 45. You sock away $6,000 each year and earn an average annual return of 8%, getting you to nearly $300,000 by age 65. That’s a lot of money, but it won’t get you far if your retirement lasts 20 years or more.
If you put off saving and investing even longer, and start at age 55, you’ll have to sock away about $19,000 each year, instead of $6,000, to get to that $300,000 in 10 years — or you could postpone your retirement while saving and investing longer.
Imagine that you started saving and investing $6,000 annually at age 30, giving your money a full 35 years in which to grow for you. You’ll end up with $1.1 million!
All that should make it clear how important it is to start saving and investing as early as possible. Even if you’re well past 35, you can still amass a meaningful sum.
Name that company
I trace my roots back to Dallas in 1927, when my founder started selling basic goods from the dock of an icehouse. (Business improved after Prohibition ended and I could sell beer.) By the 1940s, my many stores were open 16 hours a day, and I changed my name to reflect that. In 1963, I experimented with staying open 24 hours a day every day. I was the first to sell coffee in to-go cups and to offer a self-serve soda fountain. I trademarked the term “brain freeze,” too. Today my name is on more than 68,000 stores in 17 countries. Who am I?
Last week’s answer
I trace my roots back to April Fool’s Day in 1976, when I was founded in a garage by a couple of college dropouts. In 1984, I released the first mass-market computer with a mouse. One of my founders bought Pixar in 1986. Today, based in California, I employ more than 100,000 people, and my retail workers are said to be extremely smart. I sell nearly as many watches as the entire Swiss watch industry. I dropped the word “computer” from my name in 2007. If my name were more specific, it might be Northern Spy, Sheepsnose, Pippin or Arkansas Black. Who am I? (Answer: Apple)