Valentine’s Day and investing in the stock market have more in common than you think. When it comes to love, many people want a relationship that lasts safely, securely and for life.
The same features apply when investing. Although some investors thrive when they take a lot of risks, many people prefer safer investments that survive all the ups and downs of the market. If this sounds like your type, these 500 stocks might be the investment for you.
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The investment that will last a lifetime
Choosing the right stocks can be difficult, but there is one type of investment that makes it simple: S&P 500 Index funds.
An index fund is a collection of stocks that reflects a specific stock market index. An S&P 500 index fund then follows the S&P 500 and contains all the shares in the index.
There are many reasons why S&P 500 index funds are a fantastic investment. First, the companies are within the fund of the strongest and most stable organizations in the country.
Many of the shares in the S&P 500 are household names, such as Amazon, appeal, Coca-Cola, en Pfizer. Only the best of the best are included in this index, and by investing in an S&P 500 index fund, you will be investing in all 500 of these superstar companies.
Keep your money safe
Another advantage of S&P 500 index funds is that they are one of the safest types of investments. They are still subject to short-term volatility in the market, but they generally have positive returns over time.
The S&P 500 has experienced an average rate of return of 10% per annum since its inception. So, as long as you stay invested for the long term, your investments should survive even the worst market crashes.
^ SPX data by YCharts
S&P 500 index funds also tend to outperform other types of investments. Index funds are passive investments because they simply reflect the index they follow. On the other hand, a portfolio manager has actively managed mutual funds that select the shares included in the fund. This makes actively managed funds more expensive in general.
The purpose of actively managed mutual funds is to outperform index funds. However, only 24% of actively managed funds were able to perform better than index funds during the ten years ended June 2020, according to research by Morningstar. Index funds are not only more affordable than actively managed funds, but they also tend to achieve better returns.
Falling in love with index funds
It’s hard to go wrong with S&P 500 index funds. They have low cost, low risk, contain some of the most stable stocks in the country, and are also more likely to survive the market volatility. If you are ready to invest in your future, S&P 500 index funds are the investment that can last a lifetime.