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| ASK THE PIGGY BANK-WHAT IS AN INDEX FUND |
< 17-Apr-08 9:52 pm > |
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Today I am
pleased to
answer a reader
question about
investing. Here
it is:
I’ve heard a
lot lately
about the
advisability of
investing in
index funds.
What is an
index fund?
If you’ve
been reading
advice about
investing
lately, you
might have the
same question.
After all, many
financial
planning
experts and
investing
analysts
recommend index
funds for
long-term
investing, as
well as a good
choice when it
comes to riding
out a down
stock market.
An index fund
is a mutual
fund that
follows a
specific index.
The S&P 500
Index is one of
the more
popular for
this purpose.
You basically
invest in every
company listed
on an index.
Other stock
indexes that
have funds
include DJ
Wilshire 5000
(the whole
stock market),
Russell 2000
(which consists
of small
companies) and
the MSCI EAFE
(European and
Asian stocks).
These are
considered
low-maintenance
ways to
invest. Index
funds usually
perform well,
and often beat
managed funds.
Look for a
low-cost index
fund. Realize
that while the
returns won’t
be anything
really sexy,
they will
usually provide
stable,
reasonable
returns that
beat
inflation.
If you want to
ask a question,
email the Piggy
Bank.
Disclaimer: I
am not an
investment
professional.
Nothing in this
piece or on
this Web site
should be
construed as
investment
advice. Before
making
investment
decisions, do
your own
research and/or
consult with an
investment
professional.
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ASK THE PIGGY BANK-WHAT IS AN INDEX FUND |
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< 17-Apr-08 9:52 pm > |
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