An Index Fund is a mutual fund that is built to mirror a market indicator. These particular funds are known in the stock trading world as being the least expensive in terms of brokerage fees. Index funds also cover a vast spectrum of the market and are quite diversified in nature. Another trait of an index fund is that it typically doesn’t have a high economic yield. Please take note of the top five least expensive index funds according to CNN Money. In general you can expect to see gains of over 11% after a 3-year duration and over 14% after a five year period.
Top 5 Index Funds:
- Schwab U.S. Broad Market ETF
- Schwab U.S. Large-Cap ETF
- Blackrock iShares Core S&P Total U.S. Stock Market
- Vanguard 500 ETF or Total Market ETF
The Schwab U.S. Broad Market ETF
This fund is the least expensive fund highlighted here in terms of fees and expenses to the investor. ETF is the acronym for Exchange Traded Fund. This particular index fund is traded tracking the ebb and flow of the Dow Jones stock exchange over the course of any given day on the market. It is a mirror of what transpires across more than 2,500 represented companies whose stock is traded on the Dow Jones stock exchange. Charles Schwab began his stock brokerage firm in 1971.
- An EFT is an Exchange Traded Fund
- Charles Schwab Corporation was founded in 1971
- investments can include any of the more than 2500 companies represented on the market
Investing in The Schwab U.S. Large-Cap ETF
Again according to CNN Money, The Schwab U.S. Large Cap ETF is a sure and steady fund that will diversify your presence in the market. Investopedia classifies Large Cap as a shortened version of Large Capitalization which is defined as a company with a market capitalization value of more than 5 billion dollars. This fund has some stock interest in Apple, Amazon and Facebook as well as other popular companies that you hear of often in your everyday life.
- Large Cap, or Large Capitalization refers to a company that has a valued market capitalization of more than 5 billion dollars.
- This EFT has Apple listed as one of the companies it invests in
- Amazon is one of the Large Cap companies listed in its portfolio
Blackrock iShares Core S&P Total U.S. Stock Market
This index fund is much like the others mentioned in this article. The index it uses to measure what to invest in and how much to invest is the S&P. The S&P is a stock market intelligence entity that informs brokers and their investors on the choices that should be made. Standard & Poor’s (S&P) has been around for over 150 years. All of the companies are US based.
- S&P is the abbreviated version of The Standard & Poor’s stock trading index
- This particular index fund invests in over 500 United States of America based companies that are publicly traded on the NYSE.
- Standard & Poor’s is considered a reliable resource since they have been informing stock and bond trading for over 150 years.
Vanguard 500 ETF or a Vanguard Total Market ETF
Since 1975, Vanguard has been in the business of guiding the individual or corporate investor. Vanguard offers this index fund to its clients as a way to have a broad presence in the market with investments in the top 500 publicly traded companies or in the case of the Total Market product, the more than 2500 publicly traded companies represented on the stock exchange.
- The Vanguard 500 ETF is an index fund which invests in the top 500 companies on the stock exchange.
- The Vanguard Total Market ETF is a fund that expands the investor’s presence on the NYSE to potentially encompass all of the over 2500 companies represented on the NYSE
- The Vanguard Investment Firm began in 1975
Learning the rules of investing is a worthwhile past time. If you want the money you work for to work for you, investing in the stock market is a proven method. There is a lot to learn and now you know a little more about index funds. Investing in index funds brings peace of mind to the more cautious individual who wants the financial gains of investing without the inherent risk of losing your hard earned savings.