Is now a good time to invest in the S&P 500?
Have You Missed the Best Time to Invest? We're only a few months into 2024, but the S&P 500 (SNPINDEX: ^GSPC) has started off the year with a bang. The index is currently up by more than 8% this year alone and it's soared by a whopping 44% from its lowest point in October 2022.
The S&P 500 (^GSPC -0.88%) has been reaching new heights, soaring by a whopping 41% from its lowest point in October 2022. This can be an exciting time for investors, many of whom have watched their portfolios plummet in value over the past several years.
Analysts expect overall S&P 500 earnings to rise 9.5% in 2024 after increasing around 4% in 2023, LSEG data showed. But valuations have risen along with stock prices.
There is no way to time the market. Valuation for S&P 500 is high now, but they were higher in the past. Since S&P 500 rises more than fall, investing it has a good chance of making a positive return for that year. Note that if you are just starting out, your timing does not matter at all.
The historical average yearly return of the S&P 500 is 12.68% over the last 10 years, as of the end of February 2024. This assumes dividends are reinvested. Adjusted for inflation, the 10-year average stock market return (including dividends) is 9.56%.
If the S&P 500 does compound 9.2% annually over the next 10 years, it will reach 10,000 by 2033, Colas wrote Friday.
The S&P 500 has hit yet another milestone this year, ending above 5,000 for the first time on Friday. It's good news for Americans' 401(k)s, which are heavily invested in stocks, and comes just three weeks after the index notched its first record close since January of 2022.
S&P 500 could hit 6,500 by end-2025, says Capital Economics.
S&P Global Ratings expects U.S. real GDP growth of 2.5% in 2024 as the labor market remains sturdy. We continue to expect the economy to transition to slightly below-potential growth in the next couple of years.
S&P 500 2024 YEAR-END FORECASTS
Yardeni Research president Ed Yardeni has a 5,400 target for the end of 2024 but sees the benchmark hitting 6,000 in 2025 and 6,500 in 2026. To Yardeni, continued outperformance from the US economy, and an increase in productivity, will drive the upside in stocks.
Should I invest my Roth IRA in S&P 500?
U.S. stock index funds are some of the best investments for a Roth IRA. S&P 500 index funds are popular choices. “By doing the S&P, you're getting a piece of all 500 companies (in the index),” said Myles Clements, a certified financial planner and financial advisor with Fort Pitt Capital Group.
So, if you are looking to own a more diversified basket of stocks, the S&P 500 will be the right fit for you. However, those who are comfortable with the slightly higher risk for the extra returns that investing in Nasdaq 100 based fund might generate will be better off with Nasdaq 100.
Fund (ticker) | 5-year annual returns | Expense ratio |
---|---|---|
Fidelity ZERO Large Cap Index (FNILX) | 14.6% | 0% |
Vanguard S&P 500 ETF (VOO) | 14.5% | 0.03% |
SPDR S&P 500 ETF Trust (SPY) | 14.5% | 0.095% |
iShares Core S&P 500 ETF (IVV) | 14.5% | 0.03% |
- High-yield savings accounts.
- Money market funds.
- Short-term certificates of deposit.
- Series I savings bonds.
- Treasury bills, notes, bonds and TIPS.
- Corporate bonds.
- Dividend-paying stocks.
- Preferred stocks.
The S&P 500 is an index, so it does not pay dividends; however, there are mutual funds and exchange-traded funds (ETFs) that track the index, which you can invest in. If the companies in these funds pay dividends, you'll receive yours based on how many shares of the funds you hold.
Basic Info. S&P 500 Monthly Return is at 3.10%, compared to 5.17% last month and 3.51% last year. This is higher than the long term average of 0.56%. The S&P 500 Monthly Return is the investment return received each month, excluding dividends, when holding the S&P 500 index.
According to our calculations, a $1000 investment made in February 2014 would be worth $5,971.20, or a gain of 497.12%, as of February 5, 2024, and this return excludes dividends but includes price increases. Compare this to the S&P 500's rally of 178.17% and gold's return of 55.50% over the same time frame.
In 1980, had you invested a mere $1,000 in what went on to become the top-performing stock of S&P 500, then you would be sitting on a cool $1.2 million today.
The S&P 500 is all US-domiciled companies that over the last ~40 years have accounted for ~50% of all global stocks. By just owning the S&P 500 you miss out on almost half of the global opportunity set which is another ~10,000 public companies.
Category | All-time highs | |
---|---|---|
Closing | 5,254.35 | Thursday, March 28, 2024 |
Intraday | 5,264.85 | Thursday, March 28, 2024 |
Is now a good time to put money in the stock market?
Stock prices have surged significantly over the past 18 months. The S&P 500 is up by 45% since it bottomed out in October 2022, while the tech-heavy Nasdaq has soared by a whopping 58% in that time. Investing now, then, means paying much higher prices than you would if you'd bought a year or two ago.
Year | Price |
---|---|
2028 | 6725 |
2029 | 7300 |
2030 | 8900 |
2031 | 9350 |
S.No. | Company | Industry/Sector |
---|---|---|
1. | Tata Consultancy Services Ltd | IT - Software |
2. | Infosys Ltd | IT - Software |
3. | Hindustan Unilever Ltd | FMCG |
4. | Reliance Industries Ltd | Refineries |
- High-yield savings accounts.
- Certificates of deposit (CDs)
- Bonds.
- Money market funds.
- Mutual funds.
- Index Funds.
- Exchange-traded funds.
- Stocks.
Expectations of an earnings rebound in 2024 suggest earnings could continue to drive the market higher. While some valuations are stretched, there is still room for the market to grow if earnings estimates are met.
References
- https://www.fool.com/investing/2024/03/24/you-can-do-better-than-sp-500-buy-this-etf/
- https://www.forbes.com/advisor/investing/dividend-yield/
- https://www.koyfin.com/company/jnj/dividends/
- https://www.indmoney.com/articles/highest-dividend-paying-stocks
- https://www.usatoday.com/money/blueprint/retirement/best-investments-for-roth-ira/
- https://www.gobankingrates.com/investing/strategy/how-much-can-you-earn-in-dividends-with-100k/
- https://www.investopedia.com/terms/s/stockdividend.asp
- https://www.suredividend.com/pros-cons-dividend-investing/
- https://finance.yahoo.com/news/much-money-live-entirely-off-204845865.html
- https://tools.carboncollective.co/future-value/40000-in-20-years/
- https://www.stoddardfinancial.net/dividend-versus-growth-investments/
- https://investors.emergentbiosolutions.com/definition/5-year-annual-dividend-growth-rate
- https://www.experian.com/blogs/ask-experian/reasons-to-avoid-dividend-stocks/
- https://ycharts.com/indicators/sp_500_10_year_return
- https://www.forbes.com/advisor/investing/average-stock-market-return/
- https://money.usnews.com/investing/articles/best-monthly-dividend-stocks-to-buy-now
- https://www.indmoney.com/articles/top-5-stocks-to-invest
- https://www.nasdaq.com/articles/is-the-sp-500-all-you-need-to-retire-a-millionaire-12
- https://www.investopedia.com/articles/basics/11/due-dilligence-on-dividends.asp
- https://www.nerdwallet.com/article/investing/how-to-invest-in-sp500
- https://money.usnews.com/investing/articles/best-dividend-etfs-to-buy-now
- https://tradethatswing.com/average-historical-stock-market-returns-for-sp-500-5-year-up-to-150-year-averages/
- https://www.fool.com/investing/stock-market/types-of-stocks/dividend-stocks/how-to-invest-in-dividend-stocks/
- https://www.bankrate.com/investing/low-risk-investments/
- https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID3336687_code515373.pdf?abstractid=3336687&mirid=1
- https://www.investopedia.com/articles/markets/071616/history-sp-500-dividend-yield.asp
- https://www.franklintempleton.com/planning-and-learning/learn-about-investing/investing-principles/cost-of-timing-the-market
- https://finance.yahoo.com/news/better-dividend-stock-buy-apple-101200864.html
- https://en.wikipedia.org/wiki/Closing_milestones_of_the_S%26P_500
- https://www.macrotrends.net/stocks/charts/AMZN/amazon/dividend-yield-history
- https://www.investopedia.com/terms/d/ddm.asp
- https://www.reuters.com/markets/us/sp-500-end-2024-with-small-gain-after-strong-2023-2024-02-22/
- https://www.fool.com/investing/general/2013/09/21/the-best-performing-stock-on-the-sp-500-since-1980.aspx
- https://www.fidelity.com/learning-center/trading-investing/new-bull-market-2024
- https://www.barrons.com/articles/tech-stocks-s-p-500-3fd3e0e4
- https://finance.yahoo.com/news/dividend-investing-worth-145246630.html
- https://www.nerdwallet.com/article/investing/how-to-invest-dividend-stocks
- https://www.cuemath.com/questions/if-you-invest-10000-today-at-10-interest-how-much-will-you-have-in-10-years/
- https://www.bogleheads.org/forum/viewtopic.php?t=426113
- https://primexbt.com/for-traders/s-p-500-price-prediction-forecast/
- https://www.coca-cola.com/us/en/about-us/faq/when-does-the-company-pay-dividends
- https://finance.yahoo.com/news/invested-1000-p-global-decade-133005715.html
- https://macrohive.com/hive-exclusives/is-the-sp-500-a-good-investment-should-i-buy-it-now/
- https://www.investopedia.com/articles/markets-economy/091816/aapl-apple-dividend-analysis.asp
- https://www.forbes.com/sites/dereksaul/2024/02/26/berkshire-hathaway-stock-rises-to-record-high-heres-how-warren-buffetts-returns-compare-to-sp-500/
- https://www.irs.gov/taxtopics/tc404
- https://finance.yahoo.com/news/much-had-invest-tesla-10-230031124.html
- https://ycharts.com/indicators/sp_500_5_year_return
- https://finance.yahoo.com/news/more-money-investing-10-000-220010726.html
- https://www.investopedia.com/articles/basics/04/072304.asp
- https://ycharts.com/indicators/sp_500_dividend_yield
- https://www.nasdaq.com/articles/do-this-for-$4000-in-dividend-income-every-month
- https://ycharts.com/indicators/sp_500_monthly_return
- https://www.spglobal.com/ratings/en/research/articles/240326-economic-outlook-u-s-q2-2024-heading-for-an-encore-13048486
- https://www.nerdwallet.com/article/investing/the-best-investments-right-now
- https://smartasset.com/taxes/how-do-i-avoid-paying-tax-on-dividends
- https://seekingalpha.com/symbol/AAPL/dividends/dividend-growth
- https://www.etmoney.com/learn/stocks/nasdaq-100-versus-sp-500-which-index-is-better-for-investing-in-the-us/
- https://www.financialsymmetry.com/5-reasons-to-consider-not-only-investing-in-the-sp-500-ep-209/
- https://www.lenoxadvisors.com/Insights/dividend-growth-investing-as-a-long-term-strategy
- https://www.simplysafedividends.com/world-of-dividends/posts/2-how-to-build-a-dividend-portfolio
- https://www.bankrate.com/investing/best-s-p-500-index-funds/
- https://www.suredividend.com/get-rich-dividends/
- https://money.usnews.com/investing/articles/best-dividend-stocks-to-buy-this-year
- https://www.fool.com/retirement/2017/06/29/when-should-you-add-dividend-stocks-to-your-retire.aspx
- https://finance.yahoo.com/news/genius-ways-1-000-month-105500970.html
- https://www.investopedia.com/terms/r/ruleof72.asp
- https://www.vectorvest.com/blog/retirement/how-to-retire-on-dividends/
- https://finance.yahoo.com/news/now-good-time-invest-stock-113000086.html
- https://www.bankrate.com/investing/how-to-invest-in-dividend-stocks/
- https://money.usnews.com/investing/articles/dividend-stocks-to-buy-and-hold-forever
- https://www.usatoday.com/story/money/2024/02/09/s-p-500-record-401-k-dow/72526338007/
- https://finance.yahoo.com/news/barclays-believes-the-sp-500-could-hit-6000-soon--and-its-not-alone-190849325.html
- https://www.cnbc.com/2024/02/16/sp-500-could-hit-6500-by-end-2025-says-capital-economics.html
- https://www.cnn.com/cnn-underscored/money/how-to-invest-in-sp-500
- https://www.fool.com/investing/2024/04/19/missed-the-sp-500-bull-market-recovery-heres-what/
- https://www.cnbc.com/2024/03/08/warren-buffett-berkshire-hathaway-owns-2-etfs.html
- https://www.ml.com/articles/what-dividend-stocks-can-offer.html
- https://www.quora.com/I-want-to-earn-1-000-USD-every-month-from-dividends-How-much-do-I-have-to-invest-and-where
- https://www.trading212.com/learn/dividends/how-to-create-a-dividend-portfolio
- https://corporatefinanceinstitute.com/resources/wealth-management/average-annual-growth-rate/
- https://www.nasdaq.com/articles/passive-income:-7-ways-to-make-an-extra-$1000-a-month