IndexInvesting

ndexes are great tools for telling us what direction the market is taking and what trends are prevailing. So, how do we buy into these investment vehicles? Imagine the costs associated with buying the 6,500+ stocks that make up the Wilshire Total Market Index. Commission fees alone would run into the tens of thousands!




If you've been paying attention throughout this tutorial, you've probably noticed we mention index funds more than once. Index funds are simply mutual funds that based on an index and mirror its performance. The thinking behind index funds has some academic substance to it. For years, many academics have been saying that it is impossible to consistently beat the market without raising your risk level - a theory known as Efficient Market Hypothesis (EMH). So in 1975, John Bogle took the stance that "if you can't beat 'em, join 'em" and created the first