Investing in the stock market can be intimidating, but an index fund means it doesn’t have to be.
An index fund includes a group of stocks that track a specific market index. Mutual funds and exchange-traded funds (ETFs) are two examples. An investor who chooses these funds gains exposure to a diversified portfolio of stocks without having to pick individual stocks.
When investing in index funds, it’s important to keep in mind that they are not immune to market changes. In fact, they will rise and fall with the market index they track. But, a diversified portfolio that includes mutual funds or ETFs reduces the impact of market swings on your total wealth.
One common misconception about mutual fund and ETF investing is that they are only for passive investors. People assume these investors don’t want to put in the time and effort to research individual stocks.
It is true that these funds are a great option for passive investors. But, they can also be a great option for active investors who want to build a diversified portfolio of stocks.
Here at Good Life Asset Strategies, we prefer ETF’s to mutual funds because of their lower fees. We’re bargain shoppers. Feel free to reach out to us if you need help with an investment strategy that is right for your portfolio.
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