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What is an Index Fund?

An index fund or ETF(exchange trade fund) is a group of stocks in one particular index(Dow, S&P 500 etc) or sector. For example, a retail index fund may have some of the most notable companies such as Target, Amazon, Wal-Mart etc. Or You can invest in an ETF that has every company in the S&P 500. There are so many index funds out there.   

Why Invest in an Index Fund?

There are a lot of people out there that would love to invest their money but don’t want to take the time to research stocks. Stocks aren’t for everybody. But if you want to do little to no research and have a broad exposure to the stock market then index funds are the way to go. The great things about index funds is they’re usually not as volatile as stocks, they usually provide fair value and solid returns and the managers of these funds rebalance them every so often to make sure investors get the best returns possible. 

1. VOO

This Vanguard fund tracks the entire S&P 500. The S&P 500 goes up on average of 8% per year. We all know some years it will be more and some years it will even go down. But if you want to invest your money, don’t want to put in the research and want something better than a 1% savings account then this is a good fund to be in. It gets better. The VOO also pays a 1.87% dividend yield. Their dividend alone is better than a savings account. If you put $1,000 in this fund at age 18 and just add $100 a month until you’re 40 you could have $80,000.That’s a nice chunk of change for just little effort and little cash. The companies that account for the highest percentage of VOO are Apple, Microsoft, Amazon and Facebook. Four of the best  companies in the world! One more thing. Vanguard is a big player in the index funds so I feel safe having my money here.

2 . VDC

The Vanguard Consumer Staples index fun. This is a solid crash/recession index fun to have in your arsenal. VDC’s portfolio predominantly consists of companies such as Procter & Gamble, Coke, Pepsi, Wal-Mart, Philip Morris, Colgate-Palmolive and Costco. Some of the most consistent and trustworthy companies out there. Products and companies that people buy and use regardless of the economic circumstances. Currently at $160 per share, this ETF has gone up about $30 per share the past year. Investors tend to flock to these companies during downturns in the market. So it’s nice to have most of them all in one fund. Plus they pay a solid 2.43% dividend at that.

3. XSD

The SPDR semiconductor index fund. This one is very different from the other two. XSD is currently trading at $102 per share.  With everything turning to tech and it being the wave of the future. I like the group of companies in this fund.


These companies have chips and software in some of the biggest players in technology. Cell Phones, computers, TV’s, video games and even self-driving cars. More and more devices will be turning to voice command. These companies play a big part of all of this. If you want to invest in the future of technology and want a piece of all of the chips that are involved then this is the investment to be in.   Don’t invest in XSD for the dividend because they pay under 1% yield. But as far as growth, I could see this index fund up substantially a decade from now.


I picked these three index funds because I thought it was a nice mix of growth, conservative and aggressiveness.I hope you enjoyed this blog.

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By Sean

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