Use index funds from "summary" of The Bogleheads' Guide to Investing by Taylor Larimore,Mel Lindauer,Michael LeBoeuf
Index funds are a simple and effective way for investors to achieve broad diversification within their portfolio. By investing in an index fund, investors can gain exposure to a wide range of stocks or bonds that make up a specific market index, such as the S&P 500. This approach eliminates the need for investors to pick individual stocks or bonds, which can be time-consuming and risky. One of the main advantages of index funds is their low cost. Since index funds are passively managed and simply track the performance of a market index, they have lower expenses compared to actively managed funds. With lower fees, investors can keep more of their returns over the long term, which can significantly impact their overall investment performance. Another benefit of index funds is their consistency. By tracking a specific market index, index funds provide investors with consistent and predictable returns over time. This can help investors avoid the volatility and uncertainty associated with trying to time the market or pick individual securities. In addition, index funds offer broad diversification, which helps reduce the risk of any single investment significantly impacting the overall performance of a portfolio. By investing in an index fund, investors can spread their risk across a large number of securities, which can help protect their investments from market downturns or individual company failures.- Index funds are a straightforward and cost-effective way for investors to build a diversified portfolio that aligns with their long-term financial goals. By focusing on low costs, consistency, and broad diversification, investors can simplify their investment approach and increase their chances of long-term success in the market.
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