The main difference between index funds and mutual funds in general is that index funds are passively managed while mutual funds are actively managed.
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Passively managed funds simply go up and down and follow the market. On the other hand, actively managed funds have a fund manager buying and selling stocks on a weekly or even daily basis to try and outperform the market in general. The downside of actively managed funds is that their expense ratios are much higher than index funds, sometimes a whole percent higher. For example, an index fund expense ratio may be 0.
Warren Buffett is a huge believer in index funds. The best time to start investing in index funds was yesterday. The next best time to invest is today! But, if you keep investing for 20 years, you suddenly start to see a lot more growth thanks to compound interest. If you're interested in calculating how much you can make with index funds, then c.
A good rule to know for how much you should have in stocks is to take your age and subtract it from Index funds are so simple to invest in yet yield such powerful enough returns that even Warren Buffett advises people to invest in them. They will allow you to build your retirement portfolio in a way better than most mutual funds - and at a lower cost.
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But if you can scrape together the cash and can handle the volatile ride, FSCRX could be a great mutual fund for early investors during the next few decades. Jeff Reeves is editor of InvestorPlace. As of this writing, he did not own a position in any of the stocks or funds named here. Write him at editor investorplace. Premium Services Newsletters. Sign out. About Us Our Analysts.
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