Why I Started Investing in Index Funds and ETFs

During times of uncertainty, stability is key

Photo by Campaign Creators on Unsplash

It’s hard to get into investing and not go for growth stocks. Understanding the long-term approach of investing takes time. Early on, growing your money as quickly as possible is the default goal.

In my nearly three years of investing, I haven’t gone for any high-volatility stocks (outside of the $50 I put into Tesla, which has given me great returns!). But I haven’t followed the advice of many investors to just stick with index funds.

What I’ve Learned From Almost 3 Years of Investing

Many successful investors will tell newbies to invest in funds that reflect the all-encompassing market. In fact, Warren Buffett made a $1 million bet in 2008 that the S&P 500 — which measures the performance of the 500 largest U.S. companies listed on the stock exchange — would outperform any fund portfolio of hand-picked stocks over a 10-year period.

Buffett won the bet with ease, as the S&P 500 gained 125% in value in the 10 years.