Why the S&P 500 may fail as your portfolio’s benchmark
The goal of the equity index has little in common with the goal of a diversified, retirement portfolio.
The power of diversification
Although past performance doesn’t guarantee future results, a diversified portfolio has the potential to benefit from rallies in different asset classes, which are difficult to predict.
Investing strategies, such as asset allocation, diversification or rebalancing, do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. All investments have inherent risks, including loss of principal. There are no guarantees that a portfolio employing these or any other strategy will outperform a portfolio that does not engage in such strategies. Past performance does not guarantee future results.
An index is a portfolio of specific securities (such as the S&P 500, Dow Jones Industrial Average and Nasdaq composite), the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Indexes are unmanaged portfolios and investors cannot invest directly in an index. Past performance does not guarantee future results.