🧵 Index Funds Thread 📈📊💰💵🧵

I primarily invest in Index funds because they give me ownership of a wide variety of stocks, immediate diversification and lower risk – all at a low price.

They are ideal for beginner investors

Here is why 👇👇👇

- A Thread -
What is an Index Fund?

An index fund is a fund – either a mutual fund or an exchange-traded fund (ETF) – that is based on a preset basket of stocks, or index.

This index may be created by the fund manager itself or by another company such as an investment bank or a brokerage.
These fund managers then mimic the index, creating a fund that looks as much as possible like the index, without actively managing the fund.

Over time the index changes, as companies are added and deleted, and the fund manager mechanically replicates those changes in the fund.
Because of this approach, index funds are considered a type of passive investing, rather than active investing where a manager analyses stocks and tries to pick the best performers.

This passive approach means that index funds have low expense ratios, keeping them cheap.
Some of the most well-known indexes include the S&P 500, the Dow Jones Industrial Average, the FTSE 100 and the Nasdaq 100.

Index funds are a popular strategy for ETFs to use, and many ETFs are based on indexes.
Why Are Index Funds so Popular?

Investors like index funds because they offer immediate diversification with a single investment.

With one simple purchase, investors can own a wide swath of companies.
For example, one share of an index fund based on the S&P 500 provides ownership in hundreds of companies.

While some funds such as S&P 500 index funds allow you to own companies across industries, others allow exposure to a specific industry, country or even investing style.
The S&P 500 index fund continues to be among the most popular index funds.

S&P 500 funds offer a good return over time, they’re diversified and they’re about as low risk as stock investing gets.

Remember though, all stock market investing carries some risk.
Like all stocks, the value of the S&P 500 will fluctuate, but over time the index has returned about 10 percent annually.

That doesn’t mean index funds make money every year, but over long periods of time that’s been the average return.
This thread is only a brief overview of Index Funds.

If you want to know everything there is to know about Index Funds then I can highly recommend reading Index Fund Investing 101 by @thewealthdad which has 75 5 STAR REVIEWS!! https://gumroad.com/a/445707379 
You can follow @jonp201Invst.
Tip: mention @twtextapp on a Twitter thread with the keyword “unroll” to get a link to it.

Latest Threads Unrolled: