Valentine’s Day and investment in the stock exchange have more in common than you might think. When it comes to finding love, many people want a safe and lasting relationship.
These same qualities also apply to investment. While some investors thrive when they take too many risks, many people prefer safer investments, which will survive all the ups and downs of market experiences over the years. If that is your type, these 500 stocks may 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 tracks the S&P 500 and contains all the shares within that index.
There are many reasons why S&P 500 index funds are a fantastic investment. On the one hand, the fund’s companies are some of the strongest and most stable organizations in the country.
Many of the actions within the S&P 500 are familiar names, such as Amazon, Apple, Coke, and 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 the S&P 500 index funds is that they are one of the safest types of investment available. They are still subject to short-term market volatility, but generally experience positive returns over time.
The S&P 500 has achieved an average rate of return of 10% per year since it was founded. Therefore, as long as you remain invested for a long period, your investments must survive even the worst declines in the market.
^ 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. The actively managed mutual funds, on the other hand, have a portfolio manager who chooses the stocks that are included in the fund. This makes actively managed funds more expensive in general.
The aim of actively managed mutual funds is to outperform index funds. However, only 24% of actively managed funds were able to outperform index funds over the 10 years ending in June 2020, according to a Morningstar survey. Not only are index funds more accessible than actively managed funds, they also tend to have better returns.
Falling in love with index funds
It is difficult to go wrong with S&P 500 index funds. They are low cost and low risk, contain some of the country’s most stable stocks and are also more likely to survive market volatility. If you are ready to invest in your future, the S&P 500 index funds are the investment that can last a lifetime.