Make It Simple: Buy Index Funds
Updated: Apr 27, 2021
More than ever before, Americans are investing in the stock market with 55% of them owning stocks. Despite so many investors getting into the market, many are unsure of the best route to make money. In the stock market, money can be made through day trading, options trading, investing in mutual funds, index investing, and more. But what's the best route?
In terms of earning you the best returns with the least amount of risk, investing in index funds is the way to go. Index funds are funds run by money managers that look to match an index instead of trying to beat the returns of an index - like actively managed funds do.
Index funds are beneficial because they provide broad market exposure, low operating expenses, and low turnover. What's most important is that compared to actively managed funds, index funds typically have the best returns. A report by Advisor Perspectives stated that over the last five-, 10- and 15-year periods, 84%, 97%, and 92%, respectively, of actively managed large-cap funds underperformed their index counterparts (AdvisorPerspectives).
If the best money managers in the world can't consistently beat the returns of index funds, do you really think you can? Don't make it complicated. Invest into index funds.