Valentine’s Day and stock market investing have more in common than you might think. When it comes to finding love, many people want a relationship that is safe, secure and will last a lifetime.
The same properties also apply when investing. While some investors thrive on taking a lot of risk, many people prefer safer investments that will survive all the ups and downs of the market experience over the years. If that sounds like your type, these 500 stocks may be the investment for you.
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The investment that will last a lifetime
Choosing the right stocks can be difficult, but there is one type of investment that makes it easy: S&P 500 index funds.
An index fund is a collection of stocks that reflects a particular stock market index. An S&P 500 index fund then tracks the S&P 500 and includes all stocks within that index.
There are many reasons why S&P 500 index funds are a great investment. First, the companies in the fund are among the strongest and most stable organizations in the country.
Many of the stocks within the S&P 500 are household names, such as Amazon Apple Coca Cola, and PfizerOnly the best of the best is included in this index, and by investing in an S&P 500 index fund, you are investing in all 500 of these superstar companies.
Keep your money safe
Another advantage of S&P 500 index funds is that they are one of the safest types of investments available. They are still subject to short-term market volatility, but they generally achieve positive returns over time.
The S&P 500 has achieved an average return of 10% per year since its inception. So as long as you stay invested for the long term, your investments should survive even the worst of the market crashes.
^ SPX data by YCharts
S&P 500 index funds also typically outperform other types of investments. Index funds are passive investments because they simply reflect the index they track. Actively managed mutual funds, on the other hand, have a portfolio manager who hand-selects the stocks included in the fund. This generally makes actively managed funds more expensive.
The goal of actively managed mutual funds is to outperform index funds. According to Morningstar research, only 24% of actively managed funds managed to outperform index funds during the 10 years ending June 2020. Index funds are not only more affordable than actively managed funds, they also typically achieve better returns.
Falling in love with index funds
It’s hard to go wrong with S&P 500 index funds. They are cheap, low risk, contain some of the most stable stocks in the country and they will also survive market volatility faster. If you’re ready to invest in your future, S&P 500 index funds are the investment that will last a lifetime.