I want to be the first to congratulate you — if you’re reading this, you’re likely interested in beginning your investing journey. Or perhaps you’ve already started and just want to know what the heck I’m talking about. It’s all good in either scenario. The stock market empowers anyone to brighten their financial future.
But there’s a right way and a wrong way to doing things. Avoiding reckless decisions and excessive risk is essential for those just dipping their toes in the water. The good news is that there are investment tools that can help you position yourself for long-term success, especially for those just starting. I present to you: index funds.
How do index funds work?
Index funds are baskets of different stocks or bonds traded under a single ticker. It’s like someone investing in a portfolio of stocks and then breaking up ownership of it into shares that you can buy and sell. In other words, one share of an index fund gives you a tiny sliver of every stock in that fund.
There are numerous benefits to index funds. First, they help diversify your investments easily. Instead of deciding on a long list of individual stocks to buy, an index fund gives you ownership of many stocks under one ticker symbol. Turn-key diversification!
Additionally, there are many index funds out there, and you can find funds that speak to just about any investment style. Do you just want an index fund that behaves like the broader stock market? A fund like the Vanguard S&P 500 ETF (NYSEMKT: VOO) has you covered. There are index funds that focus on dividends or growth, while others are devoted to specific sectors like technology. The options are virtually endless.
Don’t underestimate them
A common misconception about index funds is that investors will generate poor returns. Hedge funds and other professionals that actively trade will surely outperform a fund that mirrors the plain-old stock market, right?
Ironically, the truth is more like the opposite of that statement. Famous investor Warren Buffett once wagered (and won) that a simple S&P 500 index fund would outperform several hedge funds over ten years.
Remember, the S&P 500 has averaged roughly 10% annual returns over the long term, which is plenty to build wealth over a long enough holding period. Heck, you’ll double your money every seven years or so!
Investors can build a portfolio of diversified funds, just like they can with stocks. Some index funds built around the S&P 500 can be a great starting point for most investors, and then you can surround it with funds aimed at your specific investing goals, whether that’s growth or dividend-focused.
Index funds are an excellent tool for beginners, giving them the upside of long-term market returns while protecting them from the unnecessary risks of picking your stocks from scratch. It can pay to keep it simple.
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If you know of local business openings or closings, please notify us here.
· Alter Ego Salon & Day Spa to hold grand opening on May 22 at 500 Broad Street in Emmaus
· Sephora at Kohl’s to open at Whitehall Kohl’s
· Juliette Bridals by Ivana has relocated to 161 Glenworth Rd., Pottsville and is having a “relocation celebration” on May 19 at noon.
· Iqor has opened a new 30,000 square-foot call center in Allentown
· Life Advance Fitness at 436 State Ave. in Emmaus opens on May 11
· Grocery Outlet Bargain Market is open at 561 S. Broad Street in Lansdale, in the former Super Foodtown location.
· The Caribbean Grill will hold its grand opening on May 10, 5:30-7:30 p.m. at 1800 Sullivan Trail in Forks Township.
· A new mafia-themed bar named Capo & Co. Keg and Cork Kitchen is hiring staff in Emmaus. The restaurant is at 1375 Chestnut St. and will feature a self-tap wine bar.
· Terrain on the Parkway, at 1625 Lehigh Parkway East in Allentown is open and renting apartments ranging from studio to three-bedroom size.
· Sports and Social opened April 28 in Allentown. The sports bar and restaurant at 645 Hamilton St. is part of a national chain.
· McCall Collective Brewing plans a May opening for its second location at 7743 Hamilton Blvd. in the Breinigsville section of Upper Macungie Township. The original brewpub is in Allentown.
· Project Paw cat cafe and thrift shop opened April 30 at 452 Northampton St., Easton. The cats in the cafe will be available for adoption. The business supports The Center for Animal Health & Welfare in Williams Township.
· McDonald’s of Coopersburg is open at 6690 Short Drive, Upper Saucon Township, just off Route 309
· Oley Valley Inn in Oley Township is coming back as The Riedenau House, a farm-to-table restaurant. It will serve a German menu.
· Margaritaville resort, a Jimmy Buffett-inspired resort is coming to Monroe County. Construction in Tobyhanna and Pocono townships may begin next year, with an opening in 2024 at the site of the old Pocono Manor.
· La Dolce Casa, at 16 W. Broad St. on Tamaqua’s main thoroughfare, has added La Dolce Casa Bakery and Italian Market just three doors away at 32 W. Broad St. in the former Bittner’s General Store.
· Rutter’s opens 3rd location in Berks at Route 222 and Long Lane in Maxatawny Township, north of Kutztown.
· Berks Nature opened The Rookery. The Rookery is in Angelica Creek Park, on top of the existing Nature Place structure.
· New Santiago’s Restaurant at 125 S. Third St. in Coopersburg has reopened after about a year off.
· Obsidian Tattoo & Piercing Parlor of Bethlehem has expanded to Emmaus. The 173 Main St. location is open now.
· Ocean State Job Lot, a Rhode Island-based discount store, will open at the former site of the Kmart at Shillington Plaza in Cumru Township.
· Elpedio’s Ristorante will open May 1 at the site of the Seipsville Inn in Palmer Township.
· King Wing has opened at 129 E. Third St. in south Bethlehem, serving buffalo wings, along with sandwiches.
· Royal Farms convenience store and gas station is headed to the site of the Brass Rail in Allentown on Lehigh Street.
· 3 Men & A Bagel is back open after a brief closing for surgery for the baker. The shop is located at 3350 Schoenersville Road, Bethlehem.
· Wert’s Cafe is back after a brief closing following the death of owner Greg Wert.
· Vinyl Press Signs & Graphics has moved to 15 S. Second St. in Emmaus. A grand opening will be held May 5.
· Juliette Bridals by Ivana will hold a ribbon cutting May 19 at 161 Genworth Road, Pottsville.
· JPMorgan Chase & Co., the biggest bank in the U.S., is coming to downtown Allentown.
· The Easton Farmers’ Market will open May 7 at Scott Park along Larry Holmes Drive.