Investment in a Low-Cost Index Fund (Article Sample)
I was required to write an article on investment and lead generation business.source..
Invest in a low-cost index fund
To keep up with a fast-paced world, people need to be equipped with innovative techniques and strategies to more than just ‘survive’ paycheck to paycheck lives. They think that their day jobs or one source of income is sufficient to fulfill their necessities but life is not only about making it through the day. If you ponder, there is more to life than just barely paying the bills. What about your wants? If you can’t set aside money for your wants, an extra treat, or your saving accounts then you need to look further.
The digital era has facilitated the possibilities of diverse income sources other than your 9-5 job. You can rely on work from home, part-time gig, or passive income arrangements. The importance of having more than a primary source of income is highlighted as the world gets hit by the COVID-19 crisis. Passive income is an ideal way to generate multiple streams of income to ensure financial stability in a period of crisis or otherwise. While many find themselves out of jobs or struggling to meet ends, passive income can act as a savior to pull you out of economic turmoil.
Passive income is an indirect source of earning which is received without a direct contract and does not require daily effort to maintain it or engage with its source. You will be earning money with minimum work in contrast to active income, in which you are investing time, effort, and skills in return for money. However, there will be an upfront investment to kick-start your passive income such as creating an account on a platform and keeping it up to date with the latest strategies.
Furthermore, it provides economic security as it generates an extra flow of cash which greatly improves the financial standing of a person. This guarantees not only security but also creates economic stability in life. It is not restricted by long hours and consistent effort to ensure the flow of money. (Buchenau, 2018) Moreover, this acts as an ideal opportunity to save up extra earnings in your retirement funds or to take a vacation to your dream destination. Either way, whether your day job has a solid income or nor not, passive income comes in hand to ensure economic security and wellbeing.
An ideal source of passive income is investing in low-cost index funds which will yield profits over time. Before embarking on your journey to invest in index funds, you first need to understand what they are. An index fund is a mutual fund or an exchange-traded fund (ETF) that creates a portfolio of stocks that mirrors the performance of a major index such as the S&P 500. The index funds are managed by fund managers that keep track of the market index that comprises stocks and bonds. Further, they evaluate and ensure that the index funds perform the same as the index. The index keeps tabs on the performance of a group of assets such as the stock prices of publicly-traded companies. Hence, the investors use these indexes to assess the performance of any fund, stock, and bonds against the market performance as invest smartly.
Consequently, investing in low-cost index funds can prove to be fruitful as they are passively managed, have lower fees, and ultimately yields profits. To invest in a low-cost index, you need to follow through with the step-by-step procedure. Firstly, you need to select the index that you wish to track. There are many different indexes available that you can track through index funds. The most well-sought index is the S&P 500 index which contains the portfolio of the top 500 companies in the US stock market. Moreover, there are sector-specific indexes that track the stocks according to a particular category.
Secondly, after selecting an index, you need to select an index fund that is tracking that index. Multiple index funds would be tracking an index such as S&P 500 has many index funds tracking its stocks in the market. That means you can choose more than one index fund tracking your selected index. However, to minimize the cost of investment you should check few basic factors, which are more efficient in tracking the performance of the index, which has the lowest costs, any restrictions on the index funds, and if there are any other possible options of index funds. Addressing these questions will help you in selecting the most appropriate index fund.
Lastly, the only step left is to buy the shares in the index fund that you have selected. The procedure is user-friendly. You need to open an account with the company that offers the fund. Another way could be to approach a broker and open a brokerage account with him that will also give you autonomy to buy and sell the shares of an index that you have shown interest in. To decide which methods suit you the most, you need to invest your time in exploring both options and look at the cost and the features that they provide. For instance, some may find that brokers charge more to open a brokerage account which means that directly opening an account at the index fund company is cost-effective. But if you wish to invest in multiple index funds that are offered by more than one fund manager then your best option is a brokerage account as it will have your combined investments under a single account rather than multiple accounts. Therefore, the method varies from person to person as it reflects the interests of the person.
Investing in a low-cost index fund is a hot topic for many around the world as it provides a person with multiple benefits and is one of the easiest ways to generate extra income on the side. You don’t need to invest time in researching the stocks as the relevant information is provided by the fund manager. There are varieties of index funds that you can invest in. The risk of losing money is reduced as the index contains thousands of stocks so even if one company collapses, the loss suffered is kept minimum. It is a cheaper option as the fund manager is not required to create stockpiles of their own. Also, it is tax-efficient as index funds don’t have active buying and selling like active funds which means that the index funds avoid creating drastic capital gains that can be taxed.
Some ETFs or mutual funds pay dividends to their stockholders when the funds make a huge profit off their assists. However, limited index funds provide their stockholders with dividends. However, to ensure dividends you can also invest in dividends index funds which pay its stockholders with dividends. In this way, you can further diversify your source of income as many companies pay dividends on annual basis such as Coca-Cola pays its investors a dividend that yields 3% annually.
Furthermore, many companies offer better and are a safer bet than Coca Cola and they even managed to retain a stable profit during the Covid-19 outbreak. The first safe option is Bristol Myers Squibb. It pays its investors a quarterly dividend of $0.49 which yields 3.2% annually. Another profitable option available is the Royal Bank of Canada which is currently yielding 4% annually. It not only pays more than the above-mentioned examples but provides a safety net by being one of the top banks in Canada. Lastly, Verizon is yielding 4.3% annually and is paying dividends and also increasing the amount along with it. (Jagielski, 2021)
These options will secure the extra wealth needed to guarantee a better retirement plan or create saving accounts that may facilitate you later in life. Moreover, it will allow you to pursue your passion or start your startup or just go on a shopping spree because you can afford to. Also, it can help pay off the negative credit balance that may exist. Hence, you can invest in these index funds and forget about them and an extra income will still make its way into your bank accounts.
Hence, low-cost index funds are an ideal option for investment that may yield profits and over time we have seen how they have exceeded expectations in managing the funds. This will provide you the edge that you always wanted in your financial life. The more space you have between your income and expense, the more relaxed and stress-free you will be. It will reduce the burden on your day job to fulfill your necessities and will create financial stability. Therefore, investing in low-cost index funds will generate the flow of cash on low investment rates even in your sleep as it does not require your constant effort and time unlike your day job, and will provide you with the economic uplift that you deserve.
Website lead generation business
The digital era is going through its golden days which received a massive boost due to the Covid-19 pandemic outbreak. The self-imposed lockdown locked people in their homes and shifted the businesses, education sector, and corporate sector, etc. to the digital medium. This created new opportunities for various businesses to flourish that generated in return huge profits for these companies. Whereas, many find themselves economically crippled and suffering from a massive financial loss. Many saw their sav...
- Semco Organizational structure Business & Marketing ArticleDescription: Once Ricardo Semler took the helm of leadership at Semco, the organization gradually shifted from autocracy type of organization to a corporate democracy. This change in organizational design prompted diverse view from different people, including business experts and scholars...1 page/≈275 words| No Sources | APA | Business & Marketing | Article |
- Specialty Pharmacy in the European Union Business & Marketing ArticleDescription: In February 2012 the European Commission (EC) announced that the euro zone economy would shrink by 0.3% in 2012. In May 2012, Spain announced that they had entered recession, thus joining other Euro-area members also in recession, namely Belgium, Ireland, Italy, the Netherlands...3 pages/≈825 words| 8 Sources | APA | Business & Marketing | Article |
- The Importance of Freedom to Operate for Specialty BiopharmaceuticalsDescription: Biopharma companies developing specialty pharmaceuticals rise and fall by the strength of their intellectual property (IP). IP rights have evolved over the last 150 years, with one intention in mind: to offer protection of someone’s ideas from imitation, by conferring a period of exclusivity....4 pages/≈1100 words| 7 Sources | APA | Business & Marketing | Article |