Originally Posted By: gabriel9766
What's a mutual fund and how does it work?
A mutual fund is a way to invest in the stock market without buying individual stocks. For instance the Vanguard Index 500 buys shares of stocks listed in the S&P 500. Over the last 10 years, it's returned an average of 6.5%. Over the last 5 years, it's been 13.85%. Over the life of the fund since 1976, it's returned an average of 10.98%. Minimum investment in this fund is $3000, but there are other funds that have lower minimum investments. So if you spend $3000 buying shares of this fund, if it goes up 10% after a year, you'll have $3300 worth of shares in your account. At one point I was putting in $2k every year in an IRA so after about 7 years, instead of 14k, the account was worth 40k because the market took off in those years. Then there was a crash, but the account was still worth about 25k afterwards.
https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0040#tab=1
What's a mutual fund and how does it work?
A mutual fund is a way to invest in the stock market without buying individual stocks. For instance the Vanguard Index 500 buys shares of stocks listed in the S&P 500. Over the last 10 years, it's returned an average of 6.5%. Over the last 5 years, it's been 13.85%. Over the life of the fund since 1976, it's returned an average of 10.98%. Minimum investment in this fund is $3000, but there are other funds that have lower minimum investments. So if you spend $3000 buying shares of this fund, if it goes up 10% after a year, you'll have $3300 worth of shares in your account. At one point I was putting in $2k every year in an IRA so after about 7 years, instead of 14k, the account was worth 40k because the market took off in those years. Then there was a crash, but the account was still worth about 25k afterwards.
https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0040#tab=1