Ask Yourself These 3 Questions Before Investing in Index Funds
You have several choices when it comes to building an investment portfolio that will, ideally, generate long-term wealth. You could load up on individual stocks and hope you choose the right ones. Or, you could rely on index funds.
Index funds are passively managed funds whose performance is tied to a specific benchmark. If you buy shares of an S&P 500 index fund, for example, the goal of that fund will be to do as well as the S&P itself.
Index funds are a popular option in 401(k) plans, but you can buy index funds outside of an employer-sponsored plan. Whether you should or not is a different story, so ask yourself these questions before making that call.
Source Fool.com
