That article spoke about the why.
Today, I’ll share about the how.
Of the many advantages of broad-based index funds, two stand out:
- You’re buying the entire market, so you win with the winners & lose with the losers & make the average market return (which is better than most fund advisors can do for you over time)
- The expense ratios can be very low because it’s not actively managed (and thus you’re not having to pay a significant amount for salaries, research, etc)
For long-term investments, I like to buy broad-based index funds, rather than sector-focused index funds.
Broad-based index funds are funds that buy most of the market.
Sector-based index funds are funds that buy a portion of the market.
The best broad-based index funds are the ones with the lowest fees.
Vanguard & Fidelity are two brokerages...