Index investing is the simplest strategy for new investors to implement. And the sooner you can get started, the better.
One of the keys to index investing is to start now. Every year, month, week and day you wait is less money in your future pocket.
Disclaimer: Just Start Investing is not a certified financial advisor. This post lays out the index investing strategy that we practice, but you should always do your own research.
The Index Investing Strategy
An index investing strategy is simple – mimic the overall market (with a mix of equity and fixed income) with next to $0 in costs.
You won’t beat the market with this strategy, but you are guaranteed not to lose to the market either. You’ll average steady, positive returns on a long term basis, which starts to feel a lot like winning.
The High Level Details
The basic portfolio below is what we use at Just Start Investing. It is not right for everyone, but it is an example of how an investor with a long time horizon before retirement can balances their investments.
As time passes, most will adjust the ratio of equities vs fixed income to favor fixed income (specifically bonds) more heavily. This will help weather any short term market swings as retirement age approaches and the funds need to get withdrawn.
Index Investing Strategy Example Portfolio:
- 60% US Large Cap
- 20% US Small/Mid Cap
- 10% International/Emerging Markets
10% Fixed Income
- 5% Bonds
- 5% REITS
Ready to start index investing? Start today (or learn more about your investment options) by utilizing the links below.
Follow the step by step guide that walks you through exactly how to start investing today
Follow the step by step guide that walks you through exactly how to start investing today with Betterment
Follow the step by step guide that walks you through exactly how to start investing today with Charles Schwab
Learn about the 4 basic types of investment accounts and how to select the right account for you
Explore the best online brokers, and the difference between traditional brokers and robo-advisors
Learn more about the types of investment options that are available within the four major asset classes