There are so many investment options out there that even the best investors in the world don’t know about all of them. The sheer variety of stocks, cryptocurrencies, and other investments can overwhelm beginners, but getting started with investing can actually be quite simple.
While everyone has their own investment goals and timeline, there’s one investment that’s a pretty good fit for a lot of people, and if I could only invest in one thing, that’s what I’d choose.
It checks a lot of important boxes
When investing, you want to maximize your earnings while reducing your risk of loss. So there are a few things you want to focus on. First, you want to invest in strong companies. These companies typically have some sort of advantage over their competition, like brand name recognition, a unique product, or low prices.
When weighing a company’s value to you, you should focus on its long-term growth potential rather than its recent performance. Ideally, you should hold your investments for at least five to seven years before selling, so you should only invest in companies you believe will perform well over this time frame.
Diversifying your savings is also key to protecting your nest egg. Most people do this by investing in multiple companies across several sectors. But diversifying doesn’t always have to involve a ton of separate investments.
If you invest in an S&P 500 index fund, you get an ownership stake in 500 of the largest publicly traded companies in the U.S. This spreads your money around between several companies, many of which are at the top of their industries. And while historic performance is no guarantee of future returns, the S&P 500 index has a compound average annual growth rate of 10.7% per year. Even many of the top actively managed mutual funds can’t match that, especially once you factor in fees.
S&P 500 index funds are among the most affordable investments around, with expense ratios — annual fees all…
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