So you’ve decided to improve your finances by dabbling in index funds, but you’re not really sure where to start.
Considering that you might be a new contender to the game, it’s no surprise that the world of investment might be a little confusing for you. Quite intimidating for many who don’t understand the stock market and the way it’s handled, even investing in something as simple as index funds might have you concerned.
Not to worry though. For first time investors, here are some recommendations for index funds that will definitely benefit you in the long run! Plus
A Recap of Index Funds
A popular option amongst investors, index funds essentially offer investors the ownership of a wide range of stocks, which are low-priced and low-risk. These funds offer immediate diversification as well, so by investing in one share of an index fund, you claim ownership in a number of companies across a range of industries.
Among offers, index funds based on S&P 500 which is Standard & Poor’s 500 Index, are considered the be the best index of them all. Globally diverse, this index is as low-risk as investing in stocks can get.
The Best Index Funds for Investing
SPDR S&P 500 ETF Trust (SPY)
The master of all ETFs, SPDR S&P 500 was founded way back in 1993 and has been successful ever since. One of the first funds, was the SPDR S&P 500 which set off the trend of RTF investing. With $302 billion available in assets, the SPDR S&P 500 is considered to be the most popular ETFs. With an expense rate of 0.09, thus fund is led by State Street Global Advisors and tracks the S&P 500.
iShares Core S&P 500 ETF
Funded by one of the fund companies in the U.S., BlackRock, iShares Core S&P 500 ETF offers about $200 billion in the form of assets. Like all larger funds, the iShares fund also tracks the S&P 500. With an expense ratio of 0.04 percent, its features make iShares Core S&P 500 one of the biggest ETFs to date.
Vanguard S&P 500 ETF (VOO)
One of the largest index funds in the industry, the Vanguard S&P 500 tracks the official S&P 500. With around $520 billion available, this ETF has a 0.03% expense ratio, so you only pay $3 per every $10,000 invested. Backed by Vanguard, this ETF that’s been trading since 2010 is considered to be a powerhouse of the fund market.
Schwab S&P 500 Index Fund
While the Schwab S&P 500 might be on the smaller side of index funds in terms of value with around $43 billion available in assets, it’s nevertheless a very strong candidate against the greater index funds. With strong records dating back to 1997, this fund is sponsored by one Charles Schwab, who is a very well-respected professional in the industry. Alongside the lucrative offer with Schwab S&P 500 Index Card, this fund also offers a 0.02 expense ratio, so you don’t really lose much money alongside, even if you are managing your funds the first time around.
Fidelity ZERO Large Cap Index (FNILX)
A move on the part of the investment company, the Fidelity ZERO Large Cap Index is a mutual fund with one great fact: there’s no expense rate at all.
Although this fund doesn’t really follow the S&P 500, it does follow the Fidelity U.S. Large Cap Index which means there’s no need to offer a licensing fee so the company can keep using the S&P trademark. Easy to understand and low-cost, the Fidelity ZERO Large Cap Index, benefits those seeking a proper investment fund, the system of which, don’t get in their heads.
Learning about Index Funds and Investing
While index funds don’t offer a return on investment immediately every year, they do help you make money in the long run, especially if you go about choosing the right index fund, to begin with. When searching, brush up on subjects like performance tracking, market capitalization and more. And if you go with another index fund, decide on the other option well before you claim it.
Remember, the stock market is tumultuous so you won’t really know how their best index funds will be affected. Just be sure to keep yourself optimistic when investing in stock funds and follow the advice of a professional in the market in order to learn how to start investing, in case the compensation management team at your work doesn’t help. Also, get access to Stash, an investing and personal finance software.
With no real hefty sums at stake here, not only will you be able to keep the costs extremely low, you’ll gain a much deeper knowledge on how the stock market works and through some small way, what you can do to positively gain from it through returns over the course of the years.