Low-Cost Index Funds 🪴

Low-Cost Index Funds 🪴 I like investing in Low-Cost Index Funds because they are easy, inexpensive, & will most likely give you a higher return than any active investor or professional fund managers will 🤩 Here’s the data on the Total US Market Index Fund vs Professionally Managed Fund: Year 1 - Index Fund Wins 60%-70% Year 5 - Index Fund Wins 75%-80% Year 10 - Index Fund Wins 82%-87% Year 20 - Index Fund Wins 90%-94% Year 30 - Index Fund Wins 95%-98% This only works if you buy and hold long-term and don’t sell every time people freak out on social media 😜 Jack Bogel created the first Index Fund in 1975, and his idea was— instead of trying to find a needle in the haystack (i.e., the winning stock), with an index fund, you buy the haystack. Since an Index Fund tracks the market, it's low-cost by nature— there aren’t high-priced fund managers trying to determine what the winning stock will be. The number one killer of returns is fees. A total market index fund solves this 🙂 Extra nerdy talk for anyone interested 👇🏼 An index fund is a portfolio of investments that pools money together from multiple investors and invests in securities (e.g., stocks & bonds). An Index Fund is a passively managed mutual fund that tracks a market index (e.g., the S&P 500, which is the 500 largest US companies, or the Total US Stock Market, which is virtually every publicly traded company in the US). Index funds are not actively managed (subject to human error), meaning there is not a manager trying to beat the market. An index fund mirrors its market index. Index funds also have extremely low expense ratios, practically free. They are tax-efficient since securities are not continually being sold and reallocated to try and beat the market. Over the last 30 years, the US market returns average just over 10% per year. That includes 4 bear markets (2 of those were major). Finally, most index funds are cap-weighted, meaning that the larger the company, the bigger the pi