What is Security for You?

Do you ever miss the forest for the trees? I do this a lot. For example, I will plan on cleaning out my email inbox in half an hour and I will end up focusing the entire time on one email response that is time intensive. Similarly, it is easy to get caught up in learning the smaller aspects of investing instead of first focusing on the forest.

An index is one of the most important terms for a financial woman to understand. It is a “forest” concept. Once you understand the concept of an index, you have the ability to measure performance, and also to invest your own money if you choose. Only by investing and measuring performance can you reach your financial goals, which lead to financial security.

An index is simply a basket, or group of stocks that represents a part of the market. Think of an index like your wardrobe, which is made up of many different elements, such as blouses, dresses, tops and belts. The term wardrobe represents all of the things that you wear. In the same way, the S&P index is made up of 500 stocks that represent the US Stock market, including favorites such as Tiffany & Co., Apple, and Coach.

Keep this simple yet powerful concept in mind as you learn more about investing. You will see and hear it time and time again. It is a forest concept.

This information is for educational use only and is not financial advice.