What To Know About Investing In Index Funds

An index fund refers to investments that track an overall market index, which is usually made up of bonds or stocks. Typically, an index fund will invest in any components that are included in the tracked index, and a fund manager is used to verify that the index fund performs along the same lines as the index. To get started with investing in index funds, you’ll want to choose one index to track and then choose a fund that tracks that selected index

You can then buy shares of that index fund. There are many different indexes that you can select and track using index funds. Once you’ve selected an index, there’s usually at least one index fund that will track that. If you find that there is more than one index fund option for your chosen index, you’ll want to look at the one which most closely tracks the performance, which index fund has the lowest expenses and whether or not there are any restrictions or limitations.

A brokerage account will allow you to buy and sell shares in the index fund you’re interested in, but you can also open direct accounts with the mutual fund company. To make sure this fits into the bigger picture of your overall investment strategy, contact our office today to learn more about how we can help you understand big and little planning options with your saving strategy.