Index Funds: Part of a Winning Investment Strategy

In Fortune Magazine’s just released 2010 Investor’s Guide, investing in index funds is seen to be a winning strategy. One can build a portfolio with broad based index funds or invest in more specialized funds offered by a myriad of companies. Either way, “stock picking, whether you do it yourself or pay a pro to do it for you, is a mug’s game. You’re better off buying and holding a cheap, diversified, and consistent index fund, which passively invests in the stocks listed on a broad market benchmark.”

This is not to say that you are not exposing yourself to the inherent risk in investing in stocks. One needs to evaluate just how much risk one can handle and then develop an asset allocation, indexing not only stocks but also bonds and commodities. Believe me, I’m not pitching Vanguard, but given the breadth of their assortment, Vanguard index funds are worth checking out.