1. What Is An Index?
What is an index? An index is like a ruler. It is a way of measuring the performance, or price movement, of publicly traded stocks. Learn more about specific indexes, like the S&P 500, at the link above.2. What Is An Index Fund And Why Would I Use One?
Buying an index fund, or even better, a portfolio of index funds, is a way to own almost every publicly traded stock that is available. Why would you want to do this? Think of it like this; instead of betting on the team you think will win the Super Bowl this year (and winning big, or losing big), you figure the NFL as a whole will make money as people attend games and buy merchandise.
3. What Would I Do - Buy Individual Stocks or Stock Index Funds?
One year I posted an entire "What Would I Do" series. Keep in mind, it is not necessarily what you should do. Instead, it is written to give you insight into how to think about various financial decisions, understand the variables involved, and then make the right decision for you. So, what would I do, buy individual stocks, or stock index funds? 95% of the time I would buy stock index funds. Learn why at the link above.4. Best Index Funds
Index mutual funds provide one of the most effective ways to invest to meet your long term investing goals. When comparing index mutual funds, you do not need to worry about how the fund is managed, as an index fund will simply own all the stocks that fall in the index it is tracking.
How then do you determine the best index mutual funds? You look at the funds’ expenses and the level of service the company provides. At the link above you'll find a list of the best index mutual funds based on cost and service.
5. Best And Worst Rolling Index Returns 1973 - Mid 2009
The charts in this series show you stock market performance compared to other safer investments like bonds or treasury securities. Returns are shown in the form of rolling index returns.
Rolling returns do not go by calendar year; instead they look at every one year, three year, five year, etc. time period beginning anew each month over the historical time frame selected. Rolling returns give you a much better indication of stock market performance than most other ways of looking at market returns.
6. Which Performs Better: Active Investing or Using Passive Index Funds?
Statistics tell us that women live longer than men. That’s a fact, and as long as we look at all women, compared to all men, it holds true. But suppose you were trying to pick out just the men who will outlive most women? Would you be willing to bet your money on your ability to choose right?
When you take this analogy, and apply it to investing, first you look at the entire market of available stocks. A passive investor wants to own all the stocks, because they think as a whole, over long periods of time, they are likely to receive higher returns from investing in the entire stock market than by picking individual stocks.
An active investor thinks they can pick out just the stocks that will have the greatest return.
