How to Invest in Index Funds

How to Invest in Index Funds

An index fund is an investment that tracks a market index, typically made up of stocks or bonds. Index funds invest in all the components that are included in the index they track, and they have fund managers whose job is to make sure that the index fund performs the same as the index does

Pick an Index

There are hundreds of different indexes you can track using index funds. The most popular index is the S&P 500 which includes 500 of the top companies in the U.S. stock market.

Choose the right fund for your index

Ask yourself the following questions: which index fund most closely tracks the performance of the index?

4 index funds to get you started

Vanguard 500 Index (NasdaqMutFund:VFIAX): Tracks the S&P 500 index; $4 annual cost for a $10,000 investment

Buy index fund shares

Open an account directly with the mutual fund company that offers the fund.

Let index funds help you get rich

Index funds offer investors of all skill levels a simple, successful way to invest

Why invest in index funds?

Minimize your time spent researching individual stocks

Why not invest in index funds?

Downsides of index funds include: You’ll never beat the market

Source

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