Investing in INDEX FUNDS have never been hard, but to start and to get it right seems to be an Issue; But here, I listed 5 steps to get started, investing Properly in Index Funds.
- Choose an Index Fund: Index funds are a type of mutual fund but, instead of being actively managed, they track a particular index, such as the S&P 500. Before investing in a particular index fund, research its objectives, asset allocation, past performance, and expense ratio.
- Determine Your Risk Tolerance: Consider how much market volatility (ups and downs) you are comfortable with when choosing an index fund. Passive investors willing to accept more volatility might select a fund following a broad market index such as the S&P 500, while more conservative investors might prefer more stable fund such as one tracking the MSCI EAFE International index.
- Decide How Much to Invest: Having a clear plan for how much you will put into a fund will help to keep costs and taxes down.
- Choose a Brokerage: Some online brokerages have lower fees than traditional brokerages while still offering good customer service and a wide array of investment options. Before committing to a particular brokerage, investigate their pricing structure and the services they offer.
- Monitor Performance: Over time, all investments will experience gains, losses, or stagnation. Keeping up to date on the performance of your chosen index fund is important in order to be able to make educated investment decisions. Your broker can be a great source of information in this regard.
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