Did you know that right after receiving his share of the proceeds from Zip2, Elon Musk immediately invested in two businesses? And now that he’s rich, he has countless other investments, most of which have contributed to him becoming one of the world’s richest men. This is all to say that investing is the cornerstone to wealth creation and if you ask me here are 5 investments worth owning for life!
Investment #1: Index Funds
The index fund can be categorized along with ETFs (exchange-traded fund) and mutual funds. An index funds is an investment holding a specific group of securities in an index. The aim is to match the performance of that benchmark closely. You may purchase index funds via an index-fund provider like Vanguard and BlackRock; or your brokerage account. Among the primary advantages of index funds is their track record of consistently beating the other fund types in overall return.
The primary reason for this is because generally, they have management fees that are lower than other funds. The management fees are less due to the fact that they are passively managed rather than stationing a manager actively trading. With a research team continuously making recommendations and analyzing securities, the portfolio of the index fund gets to duplicate that of its designated index.
Index funds also have lesser transaction costs since the index itself rarely changes. These lower costs that are available with index funds can, over the long haul, make a massive difference in your returns. With all the advantages of owning an index fund shown earlier, it’s already clear why the rich are keen on this investment; however, there’s more. By less frequently trading in and out of securities as opposed to actively managed funds, the index fund experiences less events that will have your investment being taxed meaning that this is also an investment that will minimize tax owings.
Finally, index funds employ one of the most important rules of investing which is diversification. By investing in index funds, you can invest in a group of stocks you admire without having to invest in each one individually which gives the average investor a way to diversify more easily. Therefore, for these reasons and more, the index funds are a wise investment…