Are Index Funds a Good Choice for You? Ask Yourself These 3 Questions to Find Out
You'll often hear that index funds are a solid investment at any age, and there's a lot of truth to that. When you buy index funds, you're effectively investing in a bucket of different stocks, albeit with a single purchase.
Index funds, as the name implies, are funds that are tied to specific existing indexes and that typically invest in all of the companies those indexes include. An S&P 500 index fund, for example, will generally invest in the 500 largest companies by market capitalization. It's also possible to find index funds that center on one specific industry -- you definitely have choices.
That said, index funds aren't for everyone. If you're on the fence about index funds, ask yourself these questions.
Source Fool.com
