Investing 101 - Index Funds

Investing money and creating a portfolio that will one day pay you back for all your hard work really isn't that difficult. Consistency and commitment to a few simple ideas are all you really need. The core of your portfolio, the foundation of your financial life, should be what Jack Bogle has spent his entire career and life talking about, Index Funds . It's the cheapest, easiest, and simplest way to enjoy the continually growing bounty of the US and Global economic engine. 

The first ever index fund was created to represent all the companies in the S&P 500. This was simply a list generated by a company called Standard and Poor of the 500 largest companies, by market capitalization, in the US. You've probably seen the green or red arrow next to: S&P 500 - on the bottom of a MSNBC or a any news show on television. This list of companies serves as a barometer of the financial health and success of America companies. Of course there are companies that do poorly in prosperous times, or make a killing when times are tough. 

I own shares of this index fund, as provided by the Vanguard group, out of tribute to the greatest idea to ever hit the investment world. I choose to invest with Vanguard index funds because no other company has the experience and commitment to providing this investment choice to individuals and institutions.

So what's next? How do you choice the elite class of great investors? How do you put your money in this index fund? There are a so many choices, which index fund to I pick? How much will it cost? Should I pick an ETF of Mutual Find? By the way you're asking a lot of great questions :) 

Here's my recommendation.

  1. Buy this: VTI (Vanguard's Total US Stock Market ETF)
  2. Invest as much you can each month, limit it to one a month to limit transaction fees. 
  3. Never check the price of this ETF, it honestly doesn't matter
  4. Commit to this simply strategy
  5. Retire in 40 years with a small fortune.

Thumbnail image provided by: 401kcalculator.org