Is An Index Mutual Fund The Best Choice For Long-Term Investing?
It doesn't matter what index you choose. This index will grow due to economy sector grow rate. There are many indexes in the world. But how to get money from indexes grow?
There are many indexes mutual funds. Fund share price change accordance index performance. There are thousands of mutual funds have S&P 500 as a base of their portfolio. The differences from one fund to other are operating company and expenses. Choose fund with fell known operating company and smallest expenses.
Small expenses are very important. If fund have big expenses, the managers steal investors' money. Index fund manager don't buy expensive stock market researches, don't arrive at a difficult decision witch stock to buy. Index fund manager buy stock included into index only. It isn't expensive!
The best investment strategy for indexes mutual funds is to invest some dollar amount monthly. And be the long-term investor - invest for 10 years or more. Our computer modeling of this strategy shows that you will receive profit, if you invest on monthly base during 10 years. I can't give you guaranties that you will get profit but the probability of this is close to 100%.
And the last, if you can, diversify you portfolio. Divide you portfolio into three parts. Buy large capitalization company index fund (S&P 500, DJA), small capitalization index fund (S&P 600) and developed market index fund or international index fund. It makes you portfolio more profitable and more stable.
Alexander Korablev. Individual investor and owner of FPLab.com website