The Boring Invstr - Your Simple, Digestible Weekly Investing & Finance Newsletter

Welcome Back to The Thirteenth Edition of The Boring Invstr!

Hello Boring Invstrs,

What We Are Covering This Week:

Index Investing

Index Investing and the Roulette Wheel:

Index investing is a passive investment strategy that tries to obtain similar returns to a market index. Index funds are baskets of stocks or bonds that track a specific index, such as the S&P 500 or the Dow Jones Industrial Average. Index funds are low-cost actively managed funds, offering a way to invest in a broad range of assets without picking individual stocks or bonds.

Index investing is like going to the casino and betting on the color of the ball that will come up on the roulette wheel. You're not trying to pick the exact number that will come up, because that's too hard. You just want to bet on a broad outcome, like red or black.

In the same way, index investors don't pick individual stocks. They just invest in a basket of stocks that tracks a specific index, like the S&P 500. This is a much simpler and less risky strategy than trying to pick individual stocks.

How to Use It:

There are several ways to use index investing to achieve your financial goals. For example, you may use index investing to:

• Invest for Retirement: Index funds are a great way to build a lump sum for retirement. They offer the potential for long-term growth at a low cost.

• Diversify Your Portfolio: Index funds can help you to diversify your portfolio and reduce your risk.

• Invest in a Specific Market Sector: Index funds can also be used to invest in a specific market sector, such as technology or healthcare. This can be a good way to get exposure to a particular industry and increase diversification, without increased exposure to risk.

Here Are a Few Popular Indexes:

• The Vanguard S&P 500 ETF (VOO)

• The Fidelity 500 Index Fund (FXAIX)

• The Schwab S&P 500 Index Fund (SWPPX)

Index investing is a great way to build wealth over the long term. It is a low-cost, diversified investment strategy that can help you to reach your financial goals. However, it is important to understand that there is a risk, even in a long-term passive strategy like index investing.