facebookWhat do people mean when they say 'benchmark' and what does it mean to 'beat the market'? ? - Seedly

Anonymous

29 Jul 2020

General Investing

What do people mean when they say 'benchmark' and what does it mean to 'beat the market'? ?

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It is referring to an index which investors use to compare with their investment. Examples are S&P500, MSCI all countryindex, Nasdaq, STI. Choosing the correct index is extremely important. For investors who invest in a variety of stocks in the US, he/she should use S&P500. For investors who invest solely in SG, he/she should use STI. For investors who diversify their investment worldwide, he/she should use MSCI all country. If the investor only invests in a sector, then he will have to find a suitable sector index.​​​

Paridhi Jhunjhunwala

21 Nov 2019

Associate at Kristal.AI

Hi!

A benchmark is basically a reference point to compare the returns from an investment. The S&P500, Dow Jones etc. are indices which are used as to understand the market returns and see the trends prevalent in the market. A good benchmark is usually provides a fair understanding of the market.
Benchmark is thus used as the base level of return. Beating the market thus means earning a return higher than the benchmark. For this, choosing the correct benchmark is also important so that an accurate comparison can be made.
I work at kristal.AI, and it's my passion to evaluate various upcoming investment opportunities.

Nicholes Wong

03 Apr 2019

Diploma in Business Management at Nanyang Polytechnic

There are all kinds of index around the world. For US, 1 example is the S&P 500. For SG, the exa...

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