Stock Market For Beginners | Best Index Funds – Why to invest in index funds?

Best Index Funds – Why to invest in index funds?

Simply put, index funds are the funds which track a particular index in the stock market. These funds are not actively managed and therefore don’t need highly paid fund managers to run them. It is difficult to find the best index funds since all the funds tracking a particular index would have same stock mix in them.

The idea of index funds was created by the founder of Vanguard named John Bogle. He created a fund which tracked the Standard & Poor’s index ($INX) of 500 large companies. This index fund was not a hit straight away. It was slow to start with. But slowly people realized that this fund which is so passively managed was beating most of the actively managed funds on a consistent basis. And this has been the case ever since. Only one in three actively managed stock funds in operation since 1976 has beaten the Vanguard 500.

Since then, there have been hundreds of index funds which have been launched by all fund houses. These funds are launched on any index which depending upon market capitalization like large cap, mid-cap or small cap. These can be based on any specialty, international markets or even bonds as well.

The most popular players which have launched index funds are Vanguard, Fidelity and Charles Schwab

Large Cap Index Funds

FSMKX          Fidelity Spartan 500 Index Investor

FSTMX           Fidelity Spartan Total Market Index Inv

VFINX            Vanguard 500 Index Investor

VTSMX           Vanguard Total Stock Mkt Idx

Best Mid cap index fund

VIMSX            Vanguard Mid Capitalization Index

Best Small Cap Index fund

NAESX           Vanguard Small Cap Index

Best Specialty Index Fund

VGSIX            Vanguard REIT Index

Best International/Foreign Index fund

FSIIX              Fidelity Spartan International Index Inv

VEIEX             Vanguard Emerging Mkts Stock Idx

VGTSX           Vanguard Total Intl Stock Index

Best Bond funds

VBISX             Vanguard Short-Term Bond Index

VBMFX          Vanguard Total Bond Market Index

The investor should first choose which index he wants to follow and then pick one or more of the best index funds from that particular category.

Related posts:

  1. Best Large Cap Mutual Funds
  2. Best Bond Funds – Good alternative to equity mutual funds
  3. Best Retirement Funds – Consider target date retirement funds for your old age
  4. Buy index stock
  5. Stock Market Terms – S&P 500 Index, S&P 500 index funds and S&P 500 companies

Filed Under mutual funds, stock market for beginners | Leave a Comment

Tagged With , , , ,

Comments

Leave a Reply