That’s not to say the S&P 500 tops every year. But over the past 65 years, it has generated an average annual return of around 10.5%.
And that’s not the only thing that makes S&P 500 index funds a great investment. Here are some other reasons.
1. They are easy to invest
When buying individual stocks, you need to consider many different factors. These include cash flow, debt, management, threats and opportunities.
S&P 500 index funds don’t require this kind of move because you’re not investing a substantial amount of money in a specific company. Instead, you buy a set of stocks that you hope will perform well over time.
That’s not to say you shouldn’t worry about the performance of individual stocks in the S&P 500, especially those with larger market capitalizations. But remember, if you own S&P 500 index funds and just one stock is having a bad day, it might not have such a big influence, given that it’s one in 500. And that’s you relieves as an investor.