#index-funds

#index-funds

Trump Accounts-yes, that is the official name-function basically as individual retirement accounts for kids. Any parent or guardian can open one up for a child starting in 2026, and family, friends, and employers can contribute $5,000 total each year. These accounts will then be invested in index funds, and withdrawals are largely prohibited until the child turns 18. All American children born from January 1, 2025, to December 31, 2028, will be entitled to a onetime $1,000 contribution from the government.

Speaking to her and over 60 other FIREers in the past two years has taught me that this increasingly popular four-letter acronym is a dream come true for many, but it needs to be done right. Otherwise, being untethered to a job or stream of income can lead to loneliness, anxiety, and feeling like you lack purpose.

If you had put $1,000 into the S&P 500 index at the beginning of those 60 years, you'd now have $441,196-a tremendous reward for doing nothing. But if you had put your $1,000 into Berkshire stock, you would now have a truly incredible $59,681,063. Another way to think of it: If you had invested $20,000 back then, you would today be a billionaire. Without doing a thing.

One of the most important things is to invest in stocks and not stuff.

1. Start simple - you don't need to be a trader "You can make it extremely complicated if you're a trader, but you don't have to be," Ellard-King said. Rather than spending hours glued to screens and options, he recommended mainly investing your money in index funds that track the broader market. "Just let the smartest companies in the world do their thing," he said.

As a barometer of US industrial and corporate economic health, the S&P 500 Index has few equals. Over the past decade, less than 15% of professional large-cap fund managers have been able to surpass the performance of the S&P 500. In fact, no less an investing authority than Warren Buffett cited in the 2013 Berkshire Hathaway shareholder letter: " The goal of the non-professional should not be to pick winners...instead, seek to own a cross-section of businesses that in aggregate are bound to do well. An S&P 500 index fund will achieve this goal."

The total stock market index fund aims to match the performance of the entire stock market, offering diversification beyond just the largest companies.

Investing in an international index budget provides essential market exposure, enabling investors to capitalize on diverse economic opportunities. Careful selection is crucial as not all funds perform equally.