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Why invest in index funds?

Why invest in index funds?

  1. Minimize your time spent researching individual stocks. 
  2. You can invest with less risk
  3. Index funds are available for a wide variety of investments. You can buy stock index funds and bond index funds.
  4. It's a lot less expensive
  5. You'll pay less in taxes.
  6. It's a lot easier to stick with your investing plan. When you use index funds, you can automatically invest month after month and ignore short-term ups and down

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A blue-chip company or investment is one that can be trusted and is not likely to fail”

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1. Pick an index

1. Pick an index

There are hundreds of different indexes you can track using index funds. The most popular index is the S&P 500 Index

Here's a short list of some additional top indexes, broken down by what part of the market they cover:

  • Large U.S. stocks: S&P 500, Dow Jones Industrial Average, Na...

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Why not to invest in index funds?

Why not to invest in index funds?

  1. You'll never beat the market. 
  2. You don't have any loss protection.
  3. You won't always own stocks you like.

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Your 3-step process to investing in index funds

Your 3-step process to investing in index funds

  1. Pick the index that you want to track.
  2. Choose a fund that tracks your selected index.
  3. Buy shares of that index fund.

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What is an Index Fund?

What is an Index Fund?

An index fund is an investment that tracks a market index, typically made up of stocks or bonds.

Index funds typically invest in all the components that are included in the index they track, and they have fund managers whose job it is to make sure that the index fund performs the same as t...

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3. Buy index fund shares

3. Buy index fund shares

To buy shares in your chosen index fund, you can typically open an account directly with the mutual fund company that offers the fund. Alternatively, you can open a brokerage account with a broker that allows you to buy and sell shares of the index fund you're interested in.

Again, in decid...

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What Are the Three Major Stock Indexes?

What Are the Three Major Stock Indexes?

The three most widely followed indexes in the U.S. are the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite.

  • The Standard and Poor's 500 Index is an index of 500 large cap common stocks that represent all different sectors of the market.
  • ...

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2. Choose the right fund for your index

2. Choose the right fund for your index

Once you've chosen an index, you can generally find at least one index fund that tracks it. For popular indexes like the S&P 500, you might have a dozen or more choices all tracking the same index.

If you have more than one index fund option for your chosen index, you'll want to ask...

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