Index funds and ETFs track a market index (like the S&P 500) instead of picking stocks. Decades of data show that after fees, most active managers underperform their benchmark.
Why Indexing Works
You earn market returns minus a tiny expense ratio. No timing calls, no style drift—just broad ownership of public companies.
Building a Simple Portfolio
Many investors use one global stock index fund or split US + international equity. Add bond index funds based on your age and risk tolerance.
Costs Matter
Prefer funds with expense ratios under 0.20% when possible. Use tax-advantaged accounts for bond income and rebalance occasionally.
Conclusion
Index investing is boring on purpose. Consistency and low fees beat clever stock picking for most people.